AUD/USD has been attempting to recover from a recent slump, and the market has found some support. This week, the market has seen a strong recovery in the US, and the euro is also gaining ground. However, AUD/USD is facing some resistance as it remains under the 38.2% Fibonacci retracement level of the 2022 high/low drop. This level is important, and a sustained break will carry bigger bullish implications.
Today, the Australian Dollar is looking to rally on some positive market sentiment, and the Fed has signaled more rate hikes ahead. A hawkish Fed member has also been arguing for the Fed to remain steadfast in the face of inflation. The US Treasury bond yields have also been increasing in recent weeks, especially the 10yr yield. In addition, Japanese inflation has risen to seven-year highs overnight. The combination of all these factors has helped to drive the Australian Dollar higher.
While the market is seeing some short-term resistance, a decisive move below 13600 would suggest a reversal of the momentum. It would also suggest an unwinding towards support around 13330. Ultimately, a break below this level could lead to a decline toward the previous lows from August, at about 13600.
The market is also being threatened by the FTSE 100, which is hovering near a one-month uptrend, but is also looking to corrective moves. The DAX has also been bouncing between up and down in recent sessions. The Euro is also gaining on a broad-based improvement in investor sentiment, but the Swiss Franc is still lagging behind. CAD traders are also watching Canadian Retail Sales for possible support.
The latest correction has seen a number of significant levels broken on major forex pairs, and a number of other indicators are suggesting a change in the broad outlook. The AUD/USD has been putting some pressure on the support band between 1.0095 and 1.0120, but has failed to break above it. It has also failed to hold the 200Days EMA on a closing basis, a key indicator of strength. The EUR/CHF has recently rebounded, but has not yet proven convincing momentum. The Yen is weak on some positive market sentiment, and the Canadian Dollar is also following the oil price high.
The US market seems to be a safe haven, and the US economy is perceived as the best-positioned to weather any storms. However, with the risk of a Russian invasion of Ukraine looming, the market is sceptical of the further progress of the pair. It is unlikely that the pair will be able to make another run at the October high, although it has been trending up over the past few days.