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Aussie Maintains Bullish Structure as USD Strength Caps the Breakout
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Key Points:
- AUD/USD is holding near 0.717 on the 0.0015-Brick Renko, with bricks still above the 500-SMA and momentum indicators improving.
- No broad based weakness in AUD today, with AUD/JPY and AUD/GBP higher.
- Medium term path stays bullish while the 0.71015 zone holds, with 0.72715 as the next upside test for the Aussie.
AUD/USD is still holding its bullish shape, but it hasn’t fully broken free yet. There’s carry support for the Aussie, improving Renko momentum and strength in other FX crosses. But firm US Dollar is holding it back. For now.
Mixed Aussie With Firmer Dollar
The Aussie isn’t down across all currencies. It’s down against the USD by 0.08% and AUD/EUR is softer by 0.05%. But AUD/GBP is up 0.14% and AUD/JPY is up 0.08%. The US Dollar got firmer as fresh US-Iran headlines cooled hopes for a quick and proper Strait of Hormuz opening.
Australian Yields Still Carry the Edge Against US Yields
While Australian yields have narrowed, it is still higher than the US. So the carry support isn’t as punchy as it was before, but it’s still punchy. Australian 10-year is around 4.92% relative to the US 10-year which is 4.493%. That’s a 43 bps spread still.
Australia’s Yield Curve Remains Above the US curve, But The Spread Has Narrowed From 1 Month Ago
Carry Bid Supports The Aussie on AUD/JPY Renko
AUD/JPY 0.225 Renko bricks are trading near 114.07, above the 50-SMA and way above the 500-SMA at 107.51. RSI is above 50 and the Z-Score SMA is above 0 and trending higher. The FX cross is gearing up to test 114.73 resistance.
AUD/JPY 0.225-Brick Renko Pushes Higher As Yen Weakness Keeps The Cross Supported
AUD/USD Renko Bulls Pressing Upon Medium Term Resistance
AUD/USD continues to press on the 50-SMA on the Renko. Momentum is in favor of the upside with the RSI above 50 and the Z-Score SMA trending higher. Additionally, the other trend indicators are positive with the Supertrend flipped to positive and the bricks above the long term 500-SMA. Only one left is the medium term 50-SMA.
AUD/USD 0.0015-Brick Renko Holds Near 0.7170 As Momentum Rebuilds
Resistance Levels: 0.72715, 0.74070
Medium Term Path: I’m biased positively for AUD/USD. The carry on AUD/USD is still there despite yields falling in both Australia and the US. We just need to see the medium term trend pick back up with the Renko bricks for AUD/USD going back above the 50-SMA. Once that happens we can have a discussion on the 0.72715 resistance.
About the Author
Cedric Thompsonauthor
Cedric Thompson, CMT, CFA, is an investment strategist with experience in asset management, corporate strategy, and multi-asset investing.
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