AUD/USD consolidating strong rally; over-stretched?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 9, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    AUD/USD is trading below the 0.75 handle as the US dollar picks up some demand, despite the recovery in oil while the markets main attention was taken on the surprise cut by the RBNZ.

    AUD/USD has dropped back from 0.7527 to 0.7478 and is consolidating there ahead of what could be another eventful session in Asia on the back of the Chinese PPI's / CPI's while at the end of the week, China releases Jan y/y industrial production. Before all that, we will have the consumer inflation expectations for March.

    AUD/USD levels and TD Securities bearish warnings

    Analysts at TD Securities explained that a range of technical indicators (MACD, Stochastics, RSI and Bollinger Bands) suggest that AUD looks stretched. "We think this increases their downside risk. Our proxy index for hedge fund positioning suggests AUD and NZD are crowded trades. Lopsided positioning increases the scope for a pullback in AUD, especially since our valuation models indicates these currencies are expensive."

    Meanwhile, Valeria Bednarik, chief analyst at FXStreet, explained, "In the 4 hours chart, the pair bounced from a still bullish 20 SMA earlier in the day, while the technical indicators have lost upward strength near overbought levels, but are also far from signaling a downward move, meaning some consolidation could be expected before a new leg north."
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