The AUD/USD Continues to Bounce

The AUD/USD has continued to drift higher overnight, finding a bottom in rapid fashion.

Only a day or two earlier, the price nation was very different, with the AUD/USD tumbling and getting helped along by the US Dollar. We saw the US Dollar Index hit 92.50 then effectively drop like a stone from that point onwards. Interestingly, the run-up in bond yields has slowed for now as well.

For the time being at least, we must adjust the levels we are focusing on in the Aussie. For the time being, we are short with a forex signal and are looking for resistance at 0.7750 to hold the price action down in the short term.

Longer-term, we are probably again looking at 0.7800 to do some of the heavy lifting, however, it is worth noting that this has not been an exact level by any stretch. We’ve seen price push to around that 0.7835 region so if your plan is to short the Aussie, be prepared to take some heat.

Price can run from that 0.7800 region all the way back to 0.8000 without much prior resistance, so that would be the next leg higher to watch.

At the same time, we can’t ignore the Greenback. A fall to 91.50 would coincide with that 0.7800 area so there is a strong case for a hold there and a possible reversal.

For the time being, there is no rate rise on the horizon, in the words of RBA Governor Phillip Lowe, so we must continue to look to bond markets which are possibly a more accurate representation of where the economy is headed.