Australian dollar flirting with 80

The Australian dollar has posted slight gains on Thursday. Currently, AUD/USD is trading at 0.7976, up 0.011% on the day.

Australian dollar crosses into 80 territory

The Australian dollar has been on a tear, racking up gains of 4.3% in the month of February. This culminated in a breach of the symbolic 0.80 level earlier in the day, a line that had not been breached since February 2018. Currency markets have resumed their rotation out of US dollars, and commodity currencies like the Australian dollar have been the main beneficiaries. On Thursday, the US dollar index dropped below the 90 level, which has been an important support line. This could signal further losses are ahead for the US dollar.

The RBA is uneasy about the Aussie’s sharp gains and will be none too happy if the Aussie continues to beat up on the US dollar and moves above the 80 level. A higher Australian dollar can have a negative effect on price stability and makes Australian exports more expensive and hence less competitive on the global markets. The central bank extended its QE programme earlier this month, and QE has likely helped slow the appreciation of the Australian dollar. The high exchange rate is one reason why the RBA is in no rush to taper its QE scheme.

The Aussie has also received support from an excellent release by Private Capital Expenditure for Q4 of 2020. The indicator has been in the doldrums, with seven straight declines. However, this nasty streak is over, after a strong gain of 3.1%, which easily beat the forecast of 1.1%.

 

AUD/USD Technical

  • AUD/USD continues to break through resistance lines. The pair broke above resistance at 0.7923 earlier in the day and is testing resistance at 0.7976. Above, we have resistance at 0.8076.
  • 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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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.