AUD/USD gives back half of the rebound from late April, what’s next?

If sellers wanted to send a message, they could’ve have made it clearer in trading yesterday. It was a case of a double whammy for the aussie. The Australia retail sales data was poor and when you combine that with poorer risk sentiment and a firmer dollar, it was enough to take AUD/USD down by over 1%.

To compound the misery, it comes amid a technical rejection of the 100-day moving average (red line) on Monday as well as a fall below the 200-day moving average (blue line) and the 0.6500 level yesterday. And that brings us to a test of the 50.0 retracement level of the rebound now at 0.6474.

For trading today, the dollar side of the equation will factor more into the picture. We have some key US data coming up and then the FOMC meeting.

At the same time, risk sentiment is also on edge after stocks fell hard yesterday. S&P 500 futures are down 0.3% with Nasdaq futures down 0.5%. That will be another consideration factor for the aussie in the sessions ahead.

For now, AUD/USD is calmer and sitting little changed near 0.6478. But with sellers in control again, it won’t take much to push price back down towards 0.6400 if the right conditions line up later today.

As for buyers, they have some work to do to convince otherwise. The 200-hour moving average sits at 0.6492 and the 100-hour moving average at 0.6526 currently. Those will be the first two key near-term levels to get above to solidify any potential bounce back on the week.

This article was written by Justin Low at www.forexlive.com.