After a two-day drop to erase most of last week’s gains AUD/USD has reversed higher today, holding above important support.
A horizontal level at 0.7500 is considered range support in the currency pair that carries strong bearish implication if it were breached. AUD/USD briefly and marginally dipped below the level earlier this month and once again on Wednesday. The pair managed to regain the level in the Asian session and recovered further in European trading.
A range has been playing out in the exchange rate since late January. There have been three attempts now at range support at 0.7500. Resistance falls around 0.7721 and has been tested twice.
The turn lower in AUD/USD this week followed the RBA meeting minutes release in the early week. The central bank appeared more concerned than communicated in the original statement, catching markets off guard and triggering a selloff.
AUD/USD will likely need a further catalyst or a sustained recovery in the US dollar for a break of support.
The US dollar index (DXY) was under pressure once again in the early day but found support at 99.43 which marks a spike low from December and had held the index higher at the end of January and early February. Two attempts at the level have resulted in a bounce higher today. A 50% Fibonacci retracement measured from Friday’s high to today’s low has held recoveries lower thus far.
Australian business confidence was reported by the National Australia Bank in the Asian session. The quarterly index printed at 6 versus the same figure in the prior reading which was revised up from the originally reported 5.
Out of the United States, the Philadelphia Fed manufacturing index declined to 22.0 in April from a prior 32.8 and against an expected 25.6. Weekly unemployment claims rose to 244,000 which was slightly higher than the forecast for 241,000 claims and followed 234,000 claims filed in the prior week.
The economic calendar for Friday is relatively light. The highlight pertaining to AUD/USD will be US existing home sales although the data historically has not had a major impact on the exchange rate.
Near-term support in AUD/USD falls at 0.7513 as it held the pair lower in a consolidation that took place last week and acted as support on a retracement slightly ahead of today’s North American open. Further support remains at 0.7500 which is considered a major level for the pair.
Resistance is found at 0.7555. It marks Friday’s low and carries confluence with the 200-period daily moving average.