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Firm Aussie Bounce Still Considered Corrective

AUD
  • With more stable price action for equity markets in Monday’s US session, the Australian dollar has been able to capitalise on the broad greenback weakness, with AUDUSD now ~1.5% higher as we approach the APAC crossover.
  • Despite this climb, the trend condition remains bearish for now and initial firm resistance remains defined at 0.6784, the Mar 1 high.
  • Overall, last Tuesday’s sell-off reinforces and strengthens a bearish near-term view. The break lower confirmed a bear flag formation on the daily chart and prices breached a key support at 0.6629, the Dec 20 low, signalling potential for weakness towards 0.6547 and the 0.6500 mark.
  • Westpac consumer sentiment and NAB business confidence data will cross overnight ahead of tomorrow’s US CPI report. Later this week, Chinese activity data as well as Australian unemployment data on Thursday will be the focus domestically.

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