The AUD/USD pair consolidated its recent strong gains to five-week tops and settled nearly unchanged on Friday. The risk-on impulse in the markets continued acting as a tailwind for the perceived riskier aussie, though a modest US dollar uptick kept a lid on any meaningful gains for the major. The USD drew some support from elevated US Treasury bond yields and was further underpinned by impressive US Retail Sales figures. The data validated market expectations that the Fed will begin rolling back its massive pandemic-era stimulus in 2021. The corrective pullback has now dragged the pair back below the 0.7400 mark, though the continuous rise in iron ore/copper prices might help limit losses for the resources-linked aussie. Market participants now look forward to the US economic docket, featuring the release of Industrial Production data later during the early North American session.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

From current levels, the 0.7370-65 region seems to protect the immediate downside ahead of the 0.7320-15 strong resistance breakpoint turned support. This is closely followed by the 0.7300 mark, which if broken decisively will shift the bias in favour of bearish traders. The pair might then accelerate the fall towards the next relevant support near the 0.7225 region before eventually dropping to the 0.7200 round-figure mark.

On the flip side, the 0.7400-10 region now seems to have emerged as immediate strong resistance. Some follow-through buying has the potential to push the pair towards an intermediate resistance near the 0.7440 zone. The momentum could further get extended towards testing September monthly swing highs, around the 0.7475-80 region.

AUDUSD

Oct 18 2021