AUD/USD holds above critical support, climbs to 0.6965
- Australian dollar recovers after falling sharply following the RBA meeting.
- US dollar posts mixed results, and receives support from higher US yields.
- AUD/USD finds support again around 0.6910.
The AUD/USD extended the recovery after the RBA slide and climbed to 0.6965. It is hovering around 0.6950/55, down 60 pips for the day, the worst performance since July 11.
From the RBA to higher US yields
The Reserve Bank of Australia raised the key interest rate by 50 basis points. The guidance offered by the central bank was seen as “dovish” and pushed the aussie to the downside. The AUD/USD dropped to 0.6910. After reaching a fresh daily high at 0.6909, it started to recover.
Since the beginning of the American session it recovered more than fifty pips. At the same time, the AUD/NZD that bottomed at 1.1007, the lowest in two weeks, rebounded and as of writing, it trades at 1.1055/60.
The move to the upside took place as equity prices in Wall Street turned positive and as the greenback lost momentum versus commodity currencies, even amid higher US yields.
The AUD/USD chart shows the pair still moving sideways around 0.6970. The 0.6910 zone has become a critical support that if broken should clear the way to more losses, targeting first the 20-day Simple Moving Average at 0.6878.
Analysts at Rabobank, see scope for another bout of broad-based USD strength to push AUD/USD lower on a 1 to 3 month view but then they see a recovery. “We expect AUD/USD to rise to the 0.74 area on a 12 month view.”
Technical levels