AUD/USD on a Bullish Run – Can We Expect a Correction?

Posted Wednesday, July 22, 2020 by
Arslan Butt • 2 min read

The AUD/USD pair closed at 0.71289, after placing a high of 0.71466 and a low of 0.70101. Overall, the movement of AUD/USD pair remained strongly bullish throughout the day. The AUD/USD pair extended its bullish bias and posted gains for the 4th consecutive session on Tuesday, reaching a level of 0.71466, which is the highest in 15 months. The last time the AUD/USD reached this level, in April 2019, surging to the highest level in 15 months, it was as a result of the risk-on market sentiment.

The Aussie, which is perceived as risky, gained on the back of increased risk-appetite in the market and RBA governor Philip Lowe’s comments on Tuesday, coupled with the weakness of the broad-based US dollar. The Governor of the Reserve Bank of Australia said that the economy had passed its low point, but that it faces a bumpy path ahead, with Federal Government in the best position to support the economy.

Lowe pointed to the job numbers from June, released the previous week, as evidence that the economy had turned from the corner. He also warned that the path ahead would be bumpy, and that there were some major crosscurrents in the labor market. He said that government borrowing costs were lower and direct central bank financing of government spending was not being considered. These positive comments, which indicate that the Australian economy has passed its lowest level, strengthened the Australian dollar, ultimately pushing the AUD/USD pair higher.

The upward trend was further supported by the risk sentiment that emerged after the reports of positive results on potential virus vaccines from trials in the UK and China. The EU stimulus plan that was agreed to by all EU member states on Monday, added to the risk appetite. The rising and improving risk sentiment in the market accelerated the AUD/USD pair’s upward movement on Tuesday.

On the US dollar front, the dollar remained under pressure, as the mounting number of coronavirus cases didn’t show any sign of easing, but continued to rise. As a result, the US Dollar Index posted losses for the 3rd session on Tuesday, reaching the 95.35 level. The weak US dollar added further to the gains of the AUD/USD pair on Tuesday. On the data front, the CB Leading Index from Australia for May was announced as -0.4%, at 19:30 GMT. No data was released by the US side.


Daily Technical Levels
Support Resistance
0.7043 0.7180
0.6957 0.7233
0.6905 0.7318
Pivot point: 0.7095

The AUD/USD pair was in an overbought zone at the 0.7150 level, and a bullish crossover at this level could extend the buying trend to the 0.719 level. Closing of candles below 0.7150 could drive selling until 0.7110, which marks 23.8% Fibo levels, while further selling below 0.7110 could lead the pair towards 38.2% Fibo levels, at 0.7085. Let’s keep an eye on 0.7095 to stay bullish above, and bearish below 0.7160. Good luck!   


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