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Feb 20 - 11:55 AM

AUD/USD - COMMENT-Conditions Favor An AUD/USD Run Above 0.6800

By Christopher Romano  —  Feb 20 - 10:10 AM

AUD/USD fell toward its 10-DMA Tuesday, but then rallied to a 3-week high with help from overall U.S. dollar weakness.
A run toward 0.6800 may be in the making as conditions become more favorable for longs.

A major bullish influence emerged after the PBOC slashed its five-year loan prime rate by 25bps, which is its biggest cut since the rate was introduced, in an effort to support China's property market.

USD/CNH fell to a 9-session low after the PBOC cut which helped buoy AUD/USD which trades as a proxy for Chinese economic growth, and risk in general.

Minutes of the RBA's Feb.
5-6 meeting helped underpin Australia's dollar as the board agreed it was appropriate not to rule out another rate hike.

Positioning may also be factoring into AUD/USD's gains.

Recent CFTC data indicated net-short Aussie dollar positions struck their largest in 4-months.
AUD/USD shorts may now be covering since the pair was unable to make significant downside progress as the positions increased.

Technicals add to AUD/USD's upside potential.
The pair traded above the 10-, 21- and 200-DMAs and rising daily, and monthly RSIs imply upward momentum is in place.
February's developing long-legged doji candle reinforces the bullish signals.

A break of 0.6605/35 resistance could trigger stop buying.
AUD/USD longs may then target 0.6835/75.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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