- AUD / USD has recovered modestly on Thursday after hitting six-week lows on Wednesday just above 0.7250.
- Recent profit taking, positive reopening news and the strength of the NZD are likely helping.
- The short-term technical bias of the pair continues to look bearish and rallies above 0.7300 remain subject to being sold.
Technical buying that followed its recent losing streak, as well as some positive headlines from the Australian economic reopening, have helped the AUD/USD to post a decent rally so far this Thursday. The pair touched six-week lows just above 0.7250 late on Wednesday, but has since rallied to 0.7280. That means the AUD is currently trading around 0.2% gains on the day against the US Dollar. The President of the Australian state Victoria announced on Thursday that most of the restrictions related to Covid-19 would be lifted from midnight. In recent weeks, restrictions, which were the toughest in the most populous states of Australia, New South Wales and Victoria, have been relaxed. This is expected to provide a boost to the economy in the fourth quarter.
AUD / USD may also be getting a boost from the strength of its antipodean cousin, the kiwi. The NZD is the best performing G10 currency on the day, rising 0.6% against the dollar, following a quarterly survey of business managers that showed one-year inflation expectations rose to a high of 11 years at 3.7% from 3.02% in the third quarter. Traders said the data increases the odds that the RBNZ will opt for a 50 basis point rate hike at its policy meeting next week. The AUD and the NZD are usually closely correlated.
But turning away to look at the short / medium-term outlook for AUD / USD, the technical data continues to look bearish. AUD / USD has been falling within a downtrend channel since late October. At the beginning of the week, the pair tested and rejected resistance at the top of the downtrend channel. Any recovery above 0.7300 remains subject to being sold. To the downside, the bears will target September lows just below 0.7200.
Technical levels
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