Over the past few weeks the Aussie was only one of two currencies which stood up against the Greenback strength. This came as a surprise to some, as commodity prices (and in particular Iron Ore) continued to break to new lows whilst the Aussie managed to hold ground. One of the main contributors to the AUD strength was the upbeat tone by Glenn Stevens on the Australian economy and the cash rate statement hinting that 2% is the cycle low (for now at least). Unemployment went below 6% but Capex data (leading indicator for investment) nose-dived, to provide a more mixed view of the Australian Economy.
So whilst the Aussie remained supported by bears closing out short positions, it came as no surprise to see it break above 73c when the USD finally started to show signs of weakness below the multi-year highs. We have plenty of US data out this week to make or break this analysis but, for now, it would appear the Aussie is a favoured 'buy the dip' currency cross.
With less than a month left in the year (of which only 2 weeks of liquidity remain, at best) then my call for an EOY close around 66c is looking less likely. However AUD is notorious for letting rip when pundits give up hope, so it is not impossible to see a large move as we approach the FOMC meeting.
The daily charts have found resistance below the monthly R1 and closed with a bearish harami pattern to suggest weakness around current levels. However momentum favours bullish setups upon any retracements and we have a wide zone of potential support between 0.726 - 0.72 to consider.
As long as we remain above 72c then I suspect we could test 74c but a break below the 0.716 swing low is more likely to see a quick run to 70c.
AUDUSD could test 74c if it remains above 72c
Near-term momentum favours bullish setups but after tomorrow's retail sales data it will be over to the US to make or break this analysis.