Can AUD/USD hold a break above 0.71?


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AUD/USD buyers have established a more bullish near-term bias


ForexLive

They’ve done so by breaking above the 200-hour MA (blue line) @ 0.7094 and are attempting to sustain a break back above the 0.7100 handle. Previous attempts since last Wednesday have seen buyers fall short of maintaining a firm break above the figure handle and it’s been a case of selling on any rallies towards the key hourly moving averages.
The new week is starting off a bit tepidly and so far there isn’t anything to convince me of a move higher in the aussie just yet aside from short covering on positioning data.

AUD/USD hit lows not seen since February 2016 on Friday but recovered into the close. And that was a good showing of how a squeeze can manifest in the pair rather quickly when the conditions allow for it.
For now, I still don’t see a reason for rally sellers to panic just yet. Buyers have been showing exhaustion in keeping price above 0.7100 as long as equities are still tepid and risk isn’t rebounding all too much.
Furthermore, the real key test of any upside move will require a break of the October high at 0.7160 in order to break the bearish pattern of lower highs, lower lows. As seen from the hourly chart, there’s resistance around the region from 0.7150 as well so that will be a key level for sellers to defend.
Unless there is a break of the pattern, the play is still the same for the aussie until something fundamental changes or we start to see major short squeeze at play. But even for the latter, the risks are very well defined at this point so it isn’t something that should send markets jumping.
For now though, as long as equities sentiment — particularly that of US equities — remains tepid then I don’t see how the aussie will be able to pull off a solid rally above 0.7100 unless the greenback weakens significantly. We’re likely to see some pivoting around the figure handle until US traders come in to offer more direction today.
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