GOLDWELL:Daily Market Recap - AUDUSD

The Australian Dollar is trading higher against the greenback on Tuesday boosted by a weaker buck. Bullish momentum is favoring the AUDUSD after yesterdays correction with the pair setting a new weekly high around 0.777.

The US Dollar index (DXY) pulled back sharply at the start of the American session, pushing below the psychologically significant 90 levels. The release of the ISM manufacturing report contributed to the downward pressure on the safe-haven US Dollar as the December data largely beat expectations of a downturn, instead of clocking in at a healthy 60.7.

Speculation over additional US monetary stimulus to help prop up the economic recovery efforts continue to weigh on the buck. Over the longer term, traders are positioning themselves for added greenback supply which should help provide extra support and likely lift the appeal of the AUDUSD.

Meanwhile, Wall Street indices are performing well on Tuesday, as are oil prices, which are helping to lift risk sentiment in commodity-linked currencies such as the Aussie Dollar. Widening yields on US Treasuries is also an indicator of the overall improving market sentiment.

From a technical perspective, momentum in the AUDUSD is favoring bulls at the moment though as we enter overbought conditions it wouldnt be a surprise to see some degree of mean reversion on the pair. Pullbacks should be seen as an opportunity to long the AUDUSD at a cheaper rate.

The upside target for the pair will be to clear above the 0.78 resistance level, a point last traded at in 2018. The ultimate target will be to test the 2018 high at 0.81358, with open space to climb, as long as sentiment continues to favor riskier currencies it may be smooth sailing to the top.

Daily AUDUSD Chart

(Chart Source: Tradingview 05.01.2021)

Weekly AUDUSD Chart

(Chart Source: Tradingview 05.01.2021)

On the downside, the AUDUSD should find support around the 0.236 Fibonacci retracement level around 0.75885 though a move below the 0.76 should already start stirring up selling pressure and could shift the main direction in favor of bears.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.