The Australian dollar is unchanged in the Tuesday session. Currently, AUD/USD is trading at 0.7912, down 0.02% on the day.
Will the Aussie break 80?
The Australian dollar has been on an absolute tear in the month of February. The currency has taken advantage of the rotation of the US dollar into cyclical assets, and has jumped 3.58% this month. AUD/USD hasn’t had a losing week since January, and it appears ready to make a move to break the symbolic 80-level, which hasn’t happened since February 2018. One player that is not happy with the sharp appreciation in the exchange rate is the RBA, as a high Australian dollar can be affect price stability and hamper the critical export sector. When the central bank extended its QE programme at the previous policy meeting, bank members noted that the RBA was utilizing QE in order to curb the rise of the Australian dollar.
In the US, Federal Reserve Chair Powell is testifying before Congress, and will do so again on Wednesday. In his testimony earlier in the day, Powell reiterated that the Fed plans to move cautiously, patiently and will provide the markets with plenty of advance notice of any future monetary policy moves. The Fed has assured the markets that it remains in dovish mode, yet despite this, there is speculation in some quarters that the Fed might taper its QE scheme in the near future. The Fed clearly wants to avoid the specter of a taper tantrum, and we can expect Powell to repeat in this week’s testimony that there are no plans to taper QE anytime soon.
AUD/USD remains rangebound in the Tuesday session.
- AUD/USD continues to put pressure on resistance at 0.7923. The next resistance line is at 0.7976
- There is support at 0.7770, followed by support at 0.7670
- The 50-day moving average (MA) is situated at 0.7694
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