AUD/USD consolidating overnight bid in face of strong dollar, testing 1hr smoothed 200 sma

Currently, AUD/USD is trading at 0.7680, up 0.06% on the day, having posted a daily high at 0.7684 and low at 0.7674.

AUD/USD has been consolidating the bid of the overnight rally from 0.7640 to 0.7684 highs. The theme remains with a better bid greenback with a number of fundamental components all amounting to a bullish outlook for the US economy and a divergence between the Central bank theme supporting a stronger dollar. Trump gave a campaignish address to Congress, that just being his tone, but was accompanied by with some specific details to infrastructure spending and fiscal stimulus that the markets enjoyed. The Fed-speak of late has been advocating for a near-term hike, perhaps as soon as March. 

Watch Aussie trade

Got the day ahead, Australia's trade account is expected to post a surplus of $3.9bn In December. Analysts at Westpac noted that the surplus widened to $3.5bn from $2.0bn. Export earnings are forecast to rise by 1.2%, +$0.4bn, on higher prices (coal and rural goods) and volumes (iron ore and LNG), partially offset by a pull-back in gold. Imports are expected to be flat, with a slightly firmer dollar placing downward pressure on prices.

Meanwhile, analysts at Westpac suggest that the outlook for AUD/USD on a 1-3 month term is lower to 0.7400:

"The US dollar’s impressive post-election rally may have paused, but still has potential to rise further during the months ahead. The Fed’s assertive tightening bias plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar. Against that coal and iron ore are likely to sustain a good portion of their dramatic rises, and economic data for Q4 and Q1 should improve, but these forces are subservient to the US dollar’s trend. Australia’s AAA rating will remain an issue into the May budget."

AUD/USD levels

AUD/USD is testing the 200 hr smoothed sma and eyes the 0.77 handle. Valeria Bednarik, chief analysts at FXStreet explained that the 4-hours chart shows that the price is trying to overcome a modestly bearish 20 SMA ahead of the Asian opening, whilst technical indicators have recovered within negative territory, now aiming to cross their mid-lines, limiting chances of a deeper decline, but not enough at this point to confirm a new bullish rally.

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