AUD/USD has broken back above the 0.70 level and is now pressuring its 50-day EMA, with analyst Christopher Lewis reading the pair as more positive than negative. A choppy US dollar and a more hawkish RBA frame the setup, though the 0.72 range top still caps any upside.
The Australian dollar reclaimed the 0.70 level after breaking higher over the last couple of days, and FXEmpire's Christopher Lewis reads the chart as more positive than negative. The pair had hung around its 200-day EMA for a couple of weeks, and that indicator may now turn into support.
Aussie pressures the 50-day EMA
With the 0.70 level retaken, AUD/USD is now pressuring its 50-day EMA. The backdrop is a choppy US dollar in early Thursday trading, as markets try to determine their next move. If the dollar keeps weakening, Lewis argues, the Australian dollar could benefit.
Two other threads support the case. The RBA recently sounded a little more hawkish, and if inflation picks up and commodities start to take off, a lot of traders will default to the Aussie to play that move.
Sideways range still caps the upside
The optimism comes with a limit. The pair sits in an uptrend that has gone sideways for several months, and Lewis is not expecting explosive moves in this environment unless something changes.
The top of that sideways action sits closer to the 0.72 level, which becomes the level to watch as a possible target. Until then, the reclaimed 0.70 handle and the 200-day EMA beneath it define the ground the Aussie has to hold.
Source: FXEmpire
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