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Market update: Aussie outlook remains bearish against the dollar and the euro


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Australian dollar makes cautious progress on USD; AUD/USD remains broadly biased to the downside and EUR/AUD uptrend in focus despite recent losses.

 

original-size.webpSource: Bloomberg

 

Daniel Dubrovsky | Currency Analyst, DailyFX, San Francisco | Publication date: Thursday 12 October 2023 06:21

In recent days, the Australian dollar has been aiming higher of late, with some mixed progress among major currency pairs. Looking at the daily chart below, AUD/USD has turned cautiously higher as positive RSI divergence persisted. The latter indicated that downside momentum was fading, hinting that a turn higher might have been in the cards.

Now, the exchange rate is sitting just under the 50-day moving average. In August, a bearish death cross emerged between the 20- and 50-period lines, offering a downward technical bias. As such, despite recent gains, the technical bias remains bearish. Besides the moving average, immediate resistance seems to be the 0.6459 inflection point.

The latter was established back in May. Breaking higher exposes the 0.6568 inflection point from the March low. Otherwise, turning lower places the focus on support which is the November low of 0.6272.

AUD/USD daily chart

 

AUD-USDDAILYCHART1.pngSource: TradingView

EUR/AUD technical analysis

Switching to the Euro, EUR/AUD has been in a cautious downtrend since August. But, the exchange rate remains in an overall uptrend. The latter seems to be upheld by rising support from the beginning of this year – see chart below.

From here, immediate resistance appears to be the combination of the 23.6% Fibonacci retracement level of 1.6638 and the 50-day moving average slightly above that. Clearing these would open the door to potentially revisiting the July peak of 1.7065.

Otherwise, a turn lower places the focus on rising support from the beginning of this year, which may reinstate the broader uptrend. Breaking lower opens the door to offering an increasingly bearish technical bias.

EUR/AUD daily chart

 

EUR-AUDDAILYCHART2.pngSource: TradingView

 

 

 

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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