AUD/USD: downside remains compelling, target 200 dma

AUD/USD is feeling the pressure of a strong dollar from 0.7592 to 0.7546 in a string reversal of the 0.7532 lows of bullish business dne yesterday in early Asia. 

AUD/USD has been in a bearish trend from 0.7710 and Sep 28th highs on prospects of a Fed hike this year and as we approach the elections scheduled for 8th November, the hawks are out and eye December as the most appropriate time to hike rates if required and data stacks up. 

However, the FOMC minutes showed a strong divide between FOMC members and the report was in the main balanced but slightly more dovish than previous. Nonetheless, the DXY made new highs just shy of the 98 handle and the greenback remains in charge of the FX space. Meanwhile, some factors supporting the Aussie are questionable at the moment, including commodity prices that are soft in this environment and gold remains sideways below $1,260 currently. 

Whether gold rises in this uncertain environment may not necessarily be supportive of the aussie and analysts at Westpac suggested that "AUD vulnerabilities include a potential pickup in global volatility from politics in both Europe and the US, plus the second-round effects of a rise in USD/Asia as markets prepare for an increasingly likely Dec Fed rate hike."

AUD/USD levels

The five month support line at 0.7520 is a key target above the 200 dma at 0.7511 with 0.7620 to the upside  has contained rallies.  Below 0.7520 lies the 2016 uptrend line at 0.7484 and the September low at 0.7443.

Meanwhile, with spot trading at 0.7554, we can see next resistance ahead at 0.7561 (Daily Classic PP), 0.7562 (Daily Open), 0.7566 (Hourly 20 EMA), 0.7573 (Daily High) and 0.7576 (Hourly 100 SMA). Support below can be found at 0.7546 (Daily Low), 0.7539 (Weekly Low), 0.7534 (Yesterday's Low), 0.7530 (Weekly Classic S1) and 0.7527 (Daily 100 SMA).