- Australian dollar shakes off weakness and jumps to 0.6400.
- Hopes that the Fed will ease have sent the US dollar down.
- AUD/USD is testing the resistance at 0.6410.
The Australian dollar has shaken off earlier weakness and is up almost 100 points in the first US trading session, reaching levels just above 0.6400. The pair appreciates 1.3% on the day, to erase Monday’s reversal amid widespread US dollar weakness.
US dollar plunges on Fed easing hopes
US house prices and consumer confidence, contracting above expectations, and the disappointing S&P PMI seen on Monday have raised concerns about the negative impact on the economy of the tightening path from the Federal Reserve, boosting hopes that the bank could ease its normalization cycle in the coming months.
Markets have extended gains after a mixed opening session in the US and US Treasuries. have fallen sharply, with the 10-year Gilt falling from 4.25% to 4.06 so far. The better sentiment in the markets has hurt the dollar, which lost ground against its main peers.
The Australian dollar, which had slipped back to the 0.6300 area after the Labor cabinet released its first budget, rebounded sharply during the early US session. Risk appetite has led the Aussie to test the 0.6400 resistance area, which remains unbroken for now with the pair quoting at 0.6385.
AUD/USD tests resistance at 0.6410
The Aussie is now just below 0.6410 (24 Oct high) which could hold for some time as the pair looks a bit exhausted after a nearly 100 point rally. Above here, the next potential targets would be 0.6430 (7th Oct high) and the 200-period SMA on the 4hrs chart, now in the 0.6500 zone.
To the downside, a negative reaction below 0.6300 could give bears air and take the pair towards 0.6275 (24 Oct low) on the way to 0.6215 (21 Oct low).
Technical levels to watch
Source: Fx Street
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