AUD/USD recently made an upside break from consolidation, confirming the uptrend continuation on its short-term time frames. As you can see from the chart, the pair consolidated for a few days below the .9300 major psychological resistance then made a strong upside break in today’s London session open.
This suggests that further gains could be seen for the pair, although it might make a quick corrective wave. After all, stochastic is in the overbought region, indicating that Aussie bulls are a bit exhausted already. If that’s the case, the correction could last until the former resistance level at .9300. A bounce from that level could lead to a test of the latest highs near .9350.
Uptrend Continuation Signals
Earlier today Australia reported a decline in its NAB business confidence index from 7 to 4, reflecting weaker optimism among businessmen. There have been no major reports released from Australia and none from the US so far, but it appears that the breakout was caused by dollar weakness.
The BOJ interest rate decision may have also partly weighed in on the price action, as the central bank decided to keep monetary policy unchanged, thereby resulting to a massive USD/JPY selloff.
The uptrend is expected to continue though, as the RBA has previously stated that they’re no longer looking to cut interest rates anytime soon. Meanwhile, the Fed is expected to carry on with their taper but they might make a few dovish remarks given the weak NFP report released last week.
Risk appetite has also supported the Aussie recently, as tensions in Russia and Ukraine seem to subside. However, there are still concerns about growth in China and the potential downturn in emerging economies, indicating a possible reversal from the uptrend continuation.
If buying pressure is strong, only a shallow pullback might take place for this pair before it makes new highs possibly around .9400 to .9500.
To contact the reporter of the story: Marco Roemer at firstname.lastname@example.org