The AUD/USD pair made quite a nice comeback this week, ending at around 0.7170. The pair recovered from a fresh 2021 low of 0.6992, achieved after the release of a tepid US Nonfarm Payroll report last Friday. The pair rallied alongside Wall Street, which managed to post substantial gains throughout the first half of the week. Stocks, which usually led the way for AUD/USD, hesitated mid-week but resumed their advances on Friday, following the release of US November inflation figures. As expected, the Consumer Price Index was upwardly revised to 6.8% YoY, its highest since 1982. The core reading printed at 4.9%, up from a preliminary estimate of 4.6%. 

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

The AUD/USD pair is at an inflexion point. After shedding roughly 550 pips straight, the latest advance could be understood as corrective. There are signs hinting at the pair possibly resuming its decline, and a break below 0.7125, the 23.6% retracement of the 0.7555/0.6992 decline, could provide the confirmation that’s needed. The daily chart shows a three-white-soldiers candlestick pattern from earlier in the week, followed by a consolidative phase. The pair needs to remain below the 0.7180 price zone, or else, the figure will no longer be valid. The pair could turn bullish with a recovery beyond 0.7205, the 38.2% retracement of the mentioned slump.

Meanwhile, AUD/USD is meeting sellers around a bearish 20 SMA, which remains far below the longer ones, as technical indicators stand directionless within negative levels, indicating limited buying interest.

The weekly chart shows that the pair met sellers after testing the 200 SMA, while the 100 SMA converges with the mentioned 38.2% Fibonacci retracement. The Momentum indicator is flat well into negative territory, while the RSI indicator barely bounced from oversold readings, currently at around 41.

On the other hand, a retest of the yearly low is on the table if the pair falls below 0.7125.

Aussie Dollar Hovering Below Weekly EMA50

Dec 12 2021

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