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AUD/USD Technical Analysis: Aussie Drops Most in a Month

AUD/USD Technical Analysis: Aussie Drops Most in a Month

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Aussie Dollar posts largest decline in a month vs. US counterpart
  • Waiting for improved risk/reward parameters to enter short trade

The Australian Dollar turned sharply lower against its US counterpart following a brief recovery, posting the largest daily drop in a month. The move has overturned the series of higher highs and lows set from last month’s low, hinting the dominant down trend may be resuming.

From here, a daily close below horizontal shelf support at 0.7383 exposes the 0.7311-19 area (November 21 low, 38.2% Fibonacci expansion). Alternatively, a reversal above double bottom support-turned-resistance at 0.7443 paves the way for a retest of the 38.2% Fib retracement at 0.7490.

Prices are too close to near-term support to justify entering short from a risk/reward perspective. Opting for the sidelines seems most prudent for the time being, waiting for the pair to offer an actionable opportunity to enter short in line with the dominant directional bias.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.