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AUD / USD Faces Test of September Highs As Dollar Slides, Risk Moves Up

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AUD / USD Faces Test of September Highs As Dollar Slides, Risk Moves Up

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AUD / USD is trading as high as 0.7475, its highest level since Sept. 3

The pair is now flirting with September highs of 0.7469-78 and is up more than 0.8% on the day as the dollar remains weaker to start European trading and we see a slightly more positive incline in the space of the actions to start the session.

Buyers are still in good control and a break above the key resistance outlined above paves the way for a test of 0.7500 before buyers can think of testing the 200-day moving average (blue line) at 0, 7565.

I think the latter would be a prime area for sellers to start dipping their toes back into the water, considering the slow dollar sentiment of late.

I mean, when you weigh the policy divergence between the Fed and the RBA, any major rise for AUD / USD is likely to be more limited in the big picture.

For now, it is difficult to argue against the recent weakness of the dollar, but as we approach the key levels noted above, expect the bullish momentum to slowly lose its appeal.

That said, the dollar has its own challenges, too, especially if the Fed makes a pretty clear distinction that tapering and rate hikes are two separate events justifying different circumstances, which will likely occur.

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AUD / USD Faces Test of September Highs As Dollar Slides, Risk Moves Up

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