- AUD / USD gained tracking traction for the second day in a row on Monday.
- The mixed media setup requires caution before placing aggressive directional bets.
- Investors look for fresh impetus in the minutes of the RBA meeting / RBA Governor Lowe’s speech.
The pair AUD/USD It built on Friday’s recovery move from the 0.7275 zone, or month-long lows, and gained some traction on the first day of a new trading week. Momentum pushed the pair to three-day highs around the 0.7370 area, although it stalled just before the 100 hourly SMA.
The US dollar reversed a significant part of its modest intraday losses following the release of the upbeat Empire State Manufacturing Index, which jumped to 30.9 in November from a previous 19.8. That said, falling US Treasury yields kept any significant gains for the dollar in check. Apart from this, the risk appetite boost in the markets acted as a tailwind for the Australian perceived as more risky.
Meanwhile, the RSI on the 1 hour chart already shows mild overbought conditions. Furthermore, the technical indicators on the daily chart, although they have rebounded from bearish territory, have yet to gain significant positive traction. The mixed media setup warrants caution for aggressive traders ahead of the RBA Meeting Minutes / RBA Governor Philip Lowe’s speech during Tuesday’s Asian session.
From current levels, any subsequent upward movement could face strong resistance around the 0.7380 zone, or the 38.2% Fibonacci level of the 0.7557-0.7282 drop. Some subsequent purchases, leading to a subsequent strength beyond 0.7400, will be seen as a new trigger for bull traders. The AUD / USD pair could then aim to test the next relevant hurdle near the 0.7425-30 supply zone.
On the other hand, the 23.6% Fibonacci level, around the 0.7340 region, now appears to protect the immediate drop. This is followed by support near the 0.7300 round level, which if decisively broken will set the stage for an extension of the recent rejection dip of the very important 200-day SMA. The downward trajectory could drag the AUD / USD pair towards the 0.7240 support zone.
1 hour chart
Technical levels
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