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Apr 11 - 11:55 PM

AUD/USD - COMMENT-AUD/USD Vulnerable As Supporting Factors Fade

By John Noonan  —  Apr 11 - 10:15 PM

The Australian dollar has been one of the strongest currencies since the start of the Russia-Ukraine crisis largely due to rising commodity prices. That support is now being threatened as China's efforts to control an Omicron outbreak spur demand concerns, while risk assets come under broad pressure.

The huge rally in industrial metals and energy since the last quarter of 2021 is being undermined by China concerns nL2N2W90EVnL2N2W9023.

The Australian dollar is also a proxy for risk appetite and there are growing signs risk assets could come under increased stress, as central banks ramp up their battle against inflation.

Last week former New York Federal Reserve President William Dudley argued in a Click here that the Fed will have to inflict more losses on stock investors to rein in asset inflation.

The S&P 500 closed below the 38.2 Fibonacci retracement of the February-March rally at 4,437 and the closely watched 50-day moving average at 4,426 on Monday.

The AUD/USD has fallen 3.4% from the 0.7661 high reached after the Reserve Bank of Australia's hawkish April 5 pivot nL2N2W306Mand is heading for the 61.8 Fibonacci retracement of the 0.7165-0.7661 move at 0.7354.
A break below 0.7350 targets major resistance around 0.7290-0.7300 where the 55- and 200-DMAs converge.

A break and close above the 21-DMA at 0.7455 would ease the downward pressure for now.

For more click on FXBUZ

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Refinitiv IFR Research/Market Commentary


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