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Apr 12 - 01:55 PM

AUD/USD - COMMENT-AUD/USD Shows Signs Its Correction May Be Finished

By Christopher Romano  —  Apr 12 - 11:35 AM

AUD/USD fell to a 15-session low on Tuesday but reversed course and rallied sharply into positive territory, generating signals that suggest its recent corrective pull back is complete.

The downside surprise to U.S. March core CPI nAQN0UGC3V helped drive interest rates lower.
The U.S. Treasury 10-year yield US10YT=RR turned negative after hitting its highest level since December 2018.
Eurodollar prices EDU3 rallied sharply to threaten recent highs as investors reduce expectations for the Fed's terminal rate.

The interest rate moves broadly weakened the U.S. dollar, which helped AUD/USD rally above the 21-day moving average and towards the 10-DMA and April 8 daily high.

AUD/USD's price action generated technical signals that should concern shorts.

Daily RSI diverged on Tuesday's low, unwound its overbought condition and is now rising.
Reinforcing the bullish signals was the formation of a daily bullish engulfing candle, while its monthly doji candle suggests the rally off January's monthly low may only be pausing.

Should Tuesday's rally extend through 0.7500 and 0.7535/40 resistance the April 5 daily high will come into focus.

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Source:
Refinitiv IFR Research/Market Commentary

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