AUD/USD: USD retraces as Bullish trend might be losing momentum

The AUD/USD had an excellent week last week due to the weakening dollar. However, the dollar has started the week strong and has caused a fair gap in the markets during the opening last night. The price broke the 200 EMA very strongly, therefore we are not expecting it the drop below it this week. However, the RSI is showing the currency pairing as overbought.

The price is looking to retrace downwards slightly. The RSI is in the overbought position and a large bearish gap was produced on the opening of trading. We are expecting the price to either drop back down to the 200 EMA where it will consolidate for a while or just remain fairly flat whilst the RSI drops, so the price can gain the momentum it needs to reach the previous support mark at 0.7528.

An entry long would not be justified at the moment as the RSI is overbought. A move lower could be possible however, we do not believe it will drop below the 200 EMA this week.

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