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AUD/USD surrenders 0.7100 as oil drops

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 8, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    The AUD/USD pair met fresh supply just above 5-DMA at 0.7126 and retreated towards 0.7103 handle as risk-aversion gripped markets once again.

    AUD/USD tracks oil lower

    Currently, the AUD/USD pair trades 0.41% higher at 0.7096, retracing the rally to 0.7129 daily highs. The Aussie continues to track the price action in oil and moves in lock-step, declining nearly 50-pips over the last hours as renewed sell-off in oil triggers risk-off market profile. Both crude benchmarks drop nearly 1%, while the European stocks are down -1.50 to -2%.

    Moreover, Moody's downgrade of the Western Australian State to AA2 from AA1, also adds to the bearish sentiment around the AUD. While reducing appetite for higher yielding currencies on the back of risk-aversion remains the main catalyst behind the recent slide from daily top.

    Nothing of note for the pair in the day ahead, except for the labour market conditions report and hence, attention now shifts towards Fed Chair Yellen’s testimony and RBA Stevens speech due later this week.

    AUD/USD Levels to watch

    The pair finds the immediate resistance at 0.7126/48 (5-DMA/ 100-DMA) above which gains could be extended to the next hurdle located at 0.7200/18 (psychological levels/ 200-DMA). On the flip side, the immediate support located at 0.7060/56 Feb 5 Low/ Daily S2). Selling pressure is likely to intensify below the last, dragging the Aussie to 0.7030/24 (Feb 2 Low/ 20-DMA).
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