Comparing Aussie Weakness to Greenback Weakness

• 4H: The AUD/USD pair in the 4H chart shows a bearish divergence. Even though the USD is weak across the board, commodity currencies such as NZD, CAD and AUD have been rivaling the weakness. These currencies may be pressured by dim outlook for global growth, with China as a barometer.
• Here is a link to a fundamental article on the AUD/USD. “Comparing the Australian and US Economies and the Impact on AUD/USD“.
• In anycase, the AUD/USD pair is not able to break above 0.8888 at the moment (61.8% retracement). If the market does, also breaking above the previous high, then I can see further Aussie strength against the greenback.
• However the bearish divergence suggests some near-term weakness in the pair.

• Daily: The daily chart shows that today’s price action may suggest at least a short-term correction the next few days. The market is respecting the 61.8% retracement again, so far.
• I want to see the AUD/USD test the SMA 50. If it bounces from it and is able to break above the 61.8% retracement (also breaking above SMA200), then a bullish outlook is born.
• The first target for this bullish outlook is a full retracement of the decline in April/May, which would bring the pair to the 0.94 area.
• The 0.94/0.95 area is a very important resistance zone, so I would not project this bullish attempt past that just yet.
• This is my preferred scenario. The alternative is a break below the rising support, and would suggest a decline towards the bottom at 0.8070.

Fan Yang
Currency Analyst
Commodity Trading Advisor

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