AUD/USD intermarket: bulls concerned for DXY through 100

Currently, AUD/USD is trading at 0.7625, down -0.42% on the day, having posted a daily high at 0.7683 and low at 0.7606.

US Dollar still strong, around 100.50

AUD/USD has been losing momentum, capped at 0.77 in recent days, and charted new lows for the first business days of this month as the dollar climbs higher in a correction of the recent sell-off. The antipodeans and the yen have lost out on the majority of the flows back to the greenback and the Aussie has been pushed back to a key support area of the 0.7600 level with DXY back above the 100 mark - should the dollar continue to recover, the Aussie could be looking at 0.7500 quite quickly despite the RBA's recent bullish projections for the Australian economy when the bank reaffirmed its forecasts overnight for 3% growth over the next couple of years. Also worth noting is copper is pulling back and the Fed funds rate has picked up to 160 while yields are higher and supportive of the greenback as well. 

The Reserve Bank of Australia kept rates steady at 1.5%, as expected. "With the economy rebounding and the housing market remaining buoyant, we think the central bank will be reluctant to ease policy further, especially when global growth prospects have improved," explained analysts at Brown Brothers Harriman, adding, "The recent strength of the Aussie has drawn some attention, but we note that Australia last week reported much strong than expected trade data.  Goods exports jumping 38% y/y in USD terms.  This was the fifth straight y/y gain, and fits in with the RBA’s more upbeat outlook."

AUD/USD levels

"Last week, the market eroded the 2013-2017 downtrend and cleared the 0.7645 Fibo resistance and in doing so has introduced scope to the 0.7778/.7850 2016 highs and the 38.2% retracement," noted analysts at Commerzbank, saying, "Directly above here lies at 0.7930. In the very near-term we would allow for a dip to 0.7470/.7490 ahead of further gains. We suspect that prices will need to go sub 7424, the 55-day ma, to alleviate upside pressure and trigger losses to 0.7312/00 then 0.7161/64, the recent lows."