Is the AUD/USD poised for a corrective rally?
- Soft treasury yields despite strong US GDP lifts AUD/USD
- Focus on US core PCE
Having witnessed a solid rebound from the key 61.8% Fib level in the North American session on Friday, the AUD/USD looks set to revisit the 200-day MA level on the back of soft treasury yields.
US 10-year yield revisits support at 2.4 percent
The US 10-year treasury yield fell back to 2.4 percent (former resistance-turned-support) this Monday morning in Asia, despite Friday's stronger-than-expected preliminary US GDP figure for the third quarter.
The softness in the yields could keep the USD on the back foot. Furthermore, Powell-led Fed is seen as less hawkish than Taylor-led Fed, thus the greenback may remain under pressure
Looking ahead - The US core PCE inflation data (Fed's preferred measure of inflation) could make or break the US 10-year yield and the US dollar. The technical correction in the AUD/USD would gather pace of the 10-year yield drops below 2.4 percent.
AUD/USD Technical Levels
The spot was last seen trading around 0.7665 levels. Jim Langlands from FX Charts writes-
"AudUsd has managed to recover from its 0.7624 Friday low and wuld seem to have the legs to extend higher on Monday. With both the 1 & 4 hour charts looking positive, a run back to 0.7690/0.7700 would not surprise. Above 0.7700 could see a run back to 0.7740, although I don’t really see it but would sell into it if we were to do so."
"In the medium term trading from the short side remains favoured, looking for another run towards Friday’s lows and eventually towards 0.7570 although that won happen today and I suspect we may drift a little higher."