AUD/USD gives up its gains

AUD/USD rallied through $0.7800 but could barely hold on after testing a downtrend resistance which has been in place since September last year.

Source: Bloomberg

This spike clearly presented a great opportunity to short the pair at better levels given that the fundamentals for the AUD continue to point to the downside.

After the set of RBA minutes we received earlier in the week, it’s clear the central bank’s easing bias will keep the local currency on the back foot. Additionally, Governor Glenn Stevens speaks at a luncheon today and, while it’s not clear what he’ll speak about, you can never rule out some policy hints nor AUD jawboning.

Key support for AUD/USD is in the $0.7600 region and, if we fail to hold on to that, the pair could extend its losses.  As a result, momentum traders could consider fresh shorts on a break below $0.7600.

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