The Australian Dollar displays another upward challenge and is only a stone’s throw (away) from grabbing the US$0.8000 threshold after posting fresh highs in 36 months, currently around US$0.7977, during the initial Asian session on Thursday.
Australia’s Q4 Private Capital Expenditure came in better than the forecast of 1.1% after reversing the previous -3.0% contraction with a +3.0% figure during the latest release.
U.S. Federal Reserve Chair Jerome Powell’s comments earlier today soothe inflation fears after telling lawmakers on Wednesday it may take more than three years to reach the central bank’s inflation goals, a sign the Fed plans to leave interest rates unchanged for a long time to come.
Reviewing the technical aspect, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator remains in overbought territory, while the Moving Average Convergence Divergence (MACD) holds to a bullish signal.
The Average Directional Movement Index (ADX) trend indicator is bullish but overheating as it climbs further above 40.
At present, it remains uncertain to what extent the bullish momentum can lift the AUD/USD pair given to the bullish signals.
However, the break of US$0.7960-65 lacked any follow-through, therefore, indicating possible fatigue due to the 3-week climb.
Still, the break has exposed the region of US$0.8015-25 to US$0.8100-45. Reassess from there.
Conversely, a break of US$0.7865 should set in motion a decline to US$0.7800-15.