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AUD / USD rises to new highs in over a month, tests key resistance level

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AUD / USD rises to new highs in over a month, tests key resistance level

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AUD / USD rises above 0.7400 to test its 100-day moving average

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Dollar weakness in recent days is certainly one of the reasons for the bullish momentum, but the Aussie itself is showing some resistance since it briefly dipped below 0.7200 in late September trading.

Risk sentiment has been a bit more mixed this week, but today’s more upbeat mood won’t hurt the Australian’s allure at all, which I’d say has more to do with rising commodity prices in the last few weeks more than anything else.

Added to that is perhaps the technical breakout in AUD / JPY, as the pair rises to its highest level since July above 84.00 currently, having breached key resistance levels since September highs near 82. .00 at the beginning of the week.

So what’s next for AUD / USD?

The 100-day moving average (red line) @ 0.7413 represents the first immediate resistance for now, so buyers will have to try to sustain a breakout above that to maintain the bull run. September highs at 0.7469-78 will be the next key test.

In the big picture, I’m not a huge fan of the Aussie, but the technicalities are hard to ignore and considering the decline from 0.7700 to almost 0.7100 since June, there has already been a modest move lower for the currency.

The COVID-19 situation is also likely to improve as vaccines gradually approach the 80% rate for the states of New South Wales and Victoria. So that will not pose an additional threat to the outlook, although economic conditions are not yet the best.

In the bigger picture, I would say that monetary policy divergence remains a key factor, and with the Fed and RBA on two different sides of the spectrum, a return towards 0.7800 to 0.8000 is likely to be out. scene.

As such, fair value gains may point towards a momentum towards the 200-day moving average (blue line) at most on a technical breakout, but it shouldn’t be much more than that.

AUD / USD rises to new highs in over a month, tests key resistance level

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