AUD/USD: In a Correction on Daily Lows of 0.7176

AUD/USD: In a Correction on Daily Lows of 0.7176

20 May 2016, 03:17
Roberto Jacobs

AUD/USD: In a Correction on Daily Lows of 0.7176

AUD/USD is currently trading at 0.7226 in a recovery and correction of the FOMC minutes slide that was extending this month's downside and April's reversal.

The key focus overnight was with the Fed yet again after yesterday's hawkish minutes. Market's were more mixed on digesting the minutes. Analysts at Westpac explained that NY Fed's Dudley (always votes) said overnight that June and July were both live, but noted Brexit risks, implying July may be favoured.

"Dudley's views tend to be very much in line with the Board of Governors, especially Chair Yellen. Hawk (and non-voter) Lacker stuck with his extreme view favouring four hikes this year. Vice Chair Fischer declined to comment on monetary policy. A June Fed hike remains a 30% chance, while November is now 100% priced in."

For the day ahead, we are quiet in Asia and await the US session for home sales and the Baker Hughes rig count to see whether oil can continue rallying on $49.00bbs highs scored earlier supporting the Aussie.

AUD/USD levels

While the Aussie is bid, Valeria Bednarik, chief analyst at FXStreet noted that in the 4 hours chart, technical indicators have barely corrected oversold readings, whilst the price is still well below a bearish 20 SMA and suggested that any upward move will likely be short-lived. On a break of that level, the key target is 0.7363 ahead of 0.7402 being recent peaks that were faded in the recent downtrend. On a continuation lower, a break of 0.7176 and recent lows, key target is 0.7096 16th Dec 2015 lows.


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