- The Australian dollar retreats from 0.7385 high: returns to 0.7360 area.
- The aussie remains firm, boosted by higher commodity prices.
- AUD/USD's rally might be capped at 0.7365 – Credit Suisse.
The Australian dollar has pulled back on Tuesday’s US session, returning to 0.7360 area after having reached fresh one-month highs at 0.7385. The pair, however, is showing strength despite the rising concerns about surging inflation pressures and has rallied about 2.5% in October so far.
Higher commodity prices are boosting AUD’s rally
The Aussie seems unaffected by the US dollar’s strength and has maintained its positive tone this week. The increasing commodity prices, with iron ore, one of Australia’s main exports surging amid higher demand from China, is driving the AUD higher across the board.
Beyond that, the relaxation of COVID-19 restrictions in Sydney, the country’s most populated city, which has gone through a four-month lockdown, has increased optimism about a post-pandemic recovery while the authorities accelerate the pace of vaccination.
AUD/USD resistance at 0.7365 might cap the upside trend – Credit Suisse
The FX analysis team at Credit Suisse, however, warns about a key resistance area at 0.7365, that could halt the current rally: “AUD/USD has broken out resistance at 0.7312/17, which suggests a short-term correction higher to the 2021 downtrend at 0.7365, which we then expect to cap the market. Thereafter, support is seen at 0.7291/87 initially, below which would confirm a turn back lower and retest of 0.7179/70 lows.”
Technical levels to watch
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