The softer inflation data at the end of July dampened hopes of a RBA rate hike this month and that dragged AUD/USD down for a bit last week. But with USD/JPY intervention keeping things interesting, the dollar fell across the major currencies space and helped to see a bounce in AUD/USD. That before the breakout in Wall Street yesterday gave more impetus for the currency pair to try and push for a stronger upside break above 0.7000.
The jump higher yesterday erased the losses from Monday and puts the focus back on the 100-day moving average (red line):
[AUD/USD daily chart]
The currency pair has been in a bit of a bind in the past two months, trending between the key daily moving averages. But with hopeful optimism surrounding US-Iran developments, bond yields coming off the boil, and equities looking to go on a tear, is it all coming together to help see AUD/USD break out to the upside?
All eyes will be on the 100-day moving average, seen at 0.7050 currently. A firm break above that will free up room to run towards 0.7200 next with the May highs at 0.7250-77 eyed next.
The technical breakout in Wall Street might just be the right catalyst to facilitate that, especially with the dollar still in limbo after the USD/JPY joint intervention.
That being said, just be wary though that August has typically been the worst month for AUD/USD in the past two decades. However, that still hasn’t stopped the aussie from defying the seasonal trend in each of the past two years during August trading.
