AUDUSd has been trending higher on its short-term time frames, moving inside an ascending channel on its 1-hour chart.
Price is currently testing the resistance at the .7700 major psychological level and might be due for a selloff back to the channel support at .7650.
The 100 SMA is above the longer-term 200 SMA on this time frame, which means that the path of least resistance is to the upside, and the gap between the two is getting wider to indicate stronger bullish momentum. In addition, the 200 SMA lines up with the channel support, adding to its strength as a floor.
Stochastic is already heading south from the overbought zone to indicate a pickup in selling pressure. However, if buyers remain in play, price could still move past the resistance and go on a sharper climb.
The dollar gave back some of its recent gains to its peers after Fed Chairperson Yellen sounded less hawkish in her second testimony. Market watchers focused on her remarks on weak investment spending and productivity, which are dampening wage growth and inflationary pressures. Data from the US, namely retail sales and CPI, all came in stronger than expected while industrial production chalked up a surprise 0.3% drop versus the estimated 0.1% uptick.
This was less upbeat compared to her earlier speech, which revealed that she is also looking to tighten sooner rather than later. In that testimony, she pointed to the progress in terms of achieving the Fed’s dual mandate of full employment and 2% inflation. Other Fed officials are supporting this view, with a couple of voting members also citing that they could vote to hike soon.
As for the Australian dollar, the currency is enjoying strong support from the less dovish RBA statement last week and improved data from China. CPI and PPI figures beat expectations for January, signaling stronger inflationary pressures and potentially higher demand. Australia’s jobs figures also turned out stronger than expected, with the economy adding 13.5K versus 9.7K jobs in January and the jobless rate improving from 5.8% to 5.7%.
By Kate Curtis from Trader’s Way
