AUD/USD: Bullish stance as capital flows return to Aussie land

With the 2018 descending trendline on the Aussie being stared from the rare-mirror, the next question traders will be asking is whether or not the Aussie can make it past 0.73/7315. If that’s the case, it allows for the next 100% proj target located at 0.7436, even if first we will have to battle through the 0.7364 daily resistance. On the hourly, the market continues to be bought up quite with decent conviction based on the volumes we are seeing. In terms of structure, we are in the 2nd cycle up, with a sequence of intraday supports underneath, also backed up by an ascending trendline.

In terms of correlations, the rise is underpinned by capital flows back into the appeal of Aussie bonds as the AU vs US 5-year yield spread rises to its highest since early Sept. The Yuan weakness is one instrument that is not backing the rise in the Aussie, although the stability in the currency alone ahead of 7.00 vs the USD is a comforting sign for AUD buyers. Lastly, the decoupling of gold as a correlated asset against the Aussie is notorious. Bottom line, looks like the capital flows are a key driver at the moment.