AUD/USD: focus remains on the downside for a test of 0.76 while below the 20 dma

AUD/USD is currently recovering in an early move in the dollar across the board, moving back up from the opening bearish gap at 0.7601 lows, creeping back to 0.7617, trying to save some face.

The US dollar and yields got a boost last week on hawkish sentiment from Fed speakers Dudley and Williams, advocating a rate hike while otherwise the market is starting to discount such an outcome for this year and the US dollar had been weaker, but with the RBA coming with an easing bias, the Aussie was struggling to hold the 0.76 handle. the week ahead will hot up with the Jackson Hole and GDP for the US, and indeed, as analysts at Westpac explained, we stay with the sentiment in the Fed and RBA, "The RBA’s easing bias combined with the Fed’s tightening bias should push the AUD lower towards 0.74 by year end, although recent BOE and BOJ easing have made the AUD even more attractive to global investment flows such that a test of 0.78 is possible first."

AUD/USD levels

To the upside, the key targets are  0.7753/.7850 zone being the areas of the recent highs and the 38.2% retracement (of the move down from June 2014), and the 2013-2016 resistance line. A move below current levels with a bias to the downside below the 20 dma at 0.7637, attention reverts to 50 day ma at .7557 and the 200 day ma at 0.7391 with a key focus on the 2016 support line lies 0.7350.