Bottom line: AUDUSD long term structure remains bullish against 0.5505 lows in March 2020. The currency might have carved a meaningful high around 0.7227 levels as bears might remain poised to correct lower towards 0.6250 levels.
Fundamental Outlook:
Dow Jones has managed to rally over +1.5% this week closing at 26828 yesterday. SPX500 is up over +1.0% while NASDAQ has managed to print new highs around 11119 today, up over +1.5% this week. Equity markets have been on the rise (marginally though) on hopes of another round of stimulus package from the Fed. As we prepare to publish, there is no deal on the next stimulus in the US.
COVID-19 infections remain a threat, though infections are on the decline in the US states of California and Florida. Europe countries are reporting a surge though it may not be as critical yet. US and China tensions continue to rise, with TikTok sale deadline set to September 15.
AUDUSD has managed to recover after dropping towards 0.7076 early this week. The exchange rate had rallied back to 0.7190 before pulling back today. AUDUSD might remain under pressure amidst rising COVID-19 infections in Melbourne (Victoria State) and rising US-China tensions.
Technical Analysis:
AUDUSD had push through fresh highs around 0.7227 over the last week before pulling back sharply. The currency might be retracing at the moment and could hit resistance around 0.7190/0.7220 levels. Bears wold remain inclined to push lower towards 0.6250 levels, going forward.
AUDUSD has remained in control of bulls since carving lows around 0.5505 in March 2020. The currency has rallied towards 0.7227, to complete an impulse wave. If the above proposed structure is correct, we should witness a meaningful corrective drop.
The fibonacci 0.618 retracement of rally between 0.5505 and 0.7227 is seen passing through 0.6250 mark. Hence, probability for a bullish bounce remains high if AUDUSD manages to reach there. Traders might remain inclined to remain flat for a while.
Harsh Japee, Technical Analyst.
