AUD/USD leaning bearish despite improved risk sentiment

AUD/USD consolidates above 0.7570 technical support.
AUD/USD risk remains to the downside.

AUD/USD ranged sideways between 0.7580 and 0.7602 overnight while risk improved generally but not dramatically in the FX space. AUD/USD is trading at 0.7588, down -0.01% on the day, having posted a daily high at 0.7592 and low at 0.7582.

Markets were confident that the House would pass the tax bill and hence the muted reaction outside of US equities that bounced hard on the outcome.

The US House voted 227-205 to overhaul the tax code. 13 Republicans voted no. However, the FX space now awaits the Senate Finance Committee's vote on tax reform and that is where things could all fall apart while senators have expressed serious misgivings over the cost and effect on the middle class. This may not take place until after Thanksgiving though which is on the 23rd November.

Forex today: DXY higher by 0.1%, sentiment was more elevated

AUD/USD 1 day:

Analysts at Westpac noted that momentum remains negative although explained that it has stalled at 0.7570 technical support.

AUD/USD 1-3 month:

"We look for AUD/USD to finish the year around 0.76, so long as markets maintain a very high probability of a Fed interest rate rise in December along with a neutral RBA outlook deep into 2018 and commodity prices remain around recent levels," the analysts argued.

AUD/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that the short-term picture shows that the pair is within a consolidative stage, although the risk remains towards the downside, as in the 4 hours chart, the price is below a bearish 20 SMA, while technical indicators remain within negative territory, directionless. Renewed selling pressure below the weekly low should lead to a continued decline towards a major long-term support at 0.7450 during the next sessions.

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