AUD/USD rallied on the back of Fed chair Yellen surprising markets at just how concerned she is about global developments and how far away that the Fed might be from being able to achieve their inflation target and was more dovish than expected in her speech to economists in New York overnight.
AUD/USD rallied from 0.7563 and reached a high of 0.7645 gaining over a cent and again supporting the upside outlook for the Aussie. The rally came as investors reduce longs in the greenback and discounting the possibility of a Fed hike any time soon.
Fed unlikely to act until September – FXStreet
“Our Westpac NY colleagues at the event agreed with the market’s instant reading of Yellen as leaning heavily to the dovish side. Markets cut pricing for an April move to zero and are not fully pricing one rate hike until Jan 2017,” explained analysts at Westpac”.
Yellen sounding more dovish – Westpac
AUD/USD bears were testing lower levels in London, with offers struggling at 0.7520 and as traders started to exit dollar longs, AUD/USD drifted higher pretty sharply to 0.7565 before the real onslaught of dollar supply came in a tsunami on trading desks sending AUD/USD smashing through the psychological 0.7600 resistance line.
AUD/USD levels
0.7680 is the 17th March high as a target for the day ahead while to the downside, the pivot is located way down at 0.7532. With RSI on the 1hr now through 70, a period of consolidation may take place ahead further ground made on the 0.77 handle, and territory not visited since 30th June 2015.
(Market News Provided by FXstreet)