A quick update on AUD following the strong employment data seen earlier today.
Last week we highlighted the potential for AUD to carve out a new low, although part of the process involved establishing a new range before breaking higher. Having since respected key support and bounced, recent price action appears promising in our view.
We can see on the daily chart that a bullish piercing line marks a swing low and confirms the support zone at 0.7160/82. With a swing low in place we’re hoping this trend can now develop and, encouragingly, the strong trajectory of the bounce means a break above 0.7315 is back on the radar. A clear move above 0.7165 opens-up a run for the 0.7484 high and leaves potential for 0.7304-0.7315 to become key support for bulls.
However, it’s worth remembering that as these bullish moves are counter to a long-term downtrend, so the Aussie runs the risk of remaining range bound between 0.7160-0.7315. Therefore, until we see a clear breakout, range trading strategies could be considered (sell high, buy low), although momentum traders will be more interested in taking this up to the 0.7484 high once the breakout has been confirmed.