Australian Dollar remains vulnerable – However, bears need to be wary of a bullish ambush under US$0.7200

November 25, 2021 - 1 week ago
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As the USA heads into a long weekend and Thanksgiving holiday, new U.S. data showed household spending rose 1.3% in October from a month earlier, while personal income increased 0.5%, while weekly jobless claims fell sharply to the lowest level in 52 years.

Also, the U.S. Federal Reserve released the minutes from its October policy meeting on Wednesday.

The minutes showed that Fed officials discussed how they “would not hesitate” to take appropriate actions to address inflation pressures that posed risks to the economy.

The minutes also revealed Fed officials maintained that the spike in inflation seen this year was still likely to be transitory while acknowledging that the rise in prices had been greater than expected.

“Many participants pointed to considerations that might suggest that elevated inflation could prove more persistent,” the minutes said.

Earlier this month, Fed officials confirmed plans to shrink the central bank’s monthly bond purchases.

The US Dollar Index, also known as US DXY, measures the greenback’s strength against a basket of six rivals refreshed its 16-month highs to 96.92.

Based on the daily technical chart, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator is negative but also oversold.

However, the Moving Average Convergence Divergence (MACD) displays bullish divergence, although the signal supports a bearish bias.

The near-term base is seen from the US$0.7165-85 region, which could see a potential rebound (if challenged).

Renewed upside challenges view the short-term cap at US$0.7255-70 to US$0.7330. Reassess from there.

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