Daily Market Recap - AUDUSD

The Aussie Dollar traded higher against its US counterpart on Thursday but remained well within yesterdays range which suggests investors are undecided on whether the AUDUSD has what it takes to finally break through the 0.78 level convincingly.

The focus today was mainly on the US monetary policy updates by the Federal Reserve and speculation over whether or not the recent spike in Treasury yields is here to stay. The price action in the AUDUSD was mostly guided by the movements in US T-bills over the past week and the rumors that the Fed will be reducing its asset-buying program this year.

Meanwhile, the yield on the 10-year Australian debt has fallen down to 1.043 percent from a 7-month high of 1.118 percent earlier this week. The contraction in yield has put it on level terms with US treasuries, in turn driving investors away from the Aussie Dollar and towards the greenback.

Given the movements in central bank policies this week, many AUDUSD traders are waiting for further guidance from the Reserve Bank of Australia on whether or not it will make any changes to its current bond-buying program. Recent Australian macro-economic data has pointed to a strong recovery in the housing, retail, and labor markets; prompting analysts to suggest a reduction in stimulus measures in Australia can be envisioned.

From a technical perspective, the AUDUSD is facing a tough hurdle to climb as the past 4 attempts to clear above the 0.78042 resistance level have fallen short. Momentum in the pair is tilted to the downside on the daily chart suggesting a potential correction towards the 20-day MA can be a possible scenario.

(Chart Source: Tradingview 14.01.2021)

The support levels beyond that point should fall around the 0.236 Fibonacci retracement line at 0.75894, and in extension, the 0.74763. On the flip side, the upside target remains firmly clear above 0.78 for a push towards the psychologically significant 0.80 marks close to the 0.81458 2018-high.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.