AUD recovery could have further to run

The AUD has been a surprise performer this week and has actually managed to put on some ground despite risk having been on the back foot for most of the week.

Source: Bloomberg

AUD/USD managed to form a base at 0.8030 and has since managed to bounce off that level. The pair has since popped back above the $0.8100 handle and is now trading at around $0.8143. The gains have come despite retail sales disappointing today and its clear there is some positive near term momentum. From a price action perspective, the pair has been in a downtrend since mid-November and it is finally looking like it is close to breaking it. Traders will be looking for a close above $0.8122 for confirmation we are seeing a near term reversal in the trend. Once this is confirmed as a break we might see a near term squeeze into 0.8200 where there is a congestion zone which might see the recovery stall. From there sellers might be looking to come back into the market.

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