AUD/USD: Failed breakout above 200-day average (1.0409)?

AUD/USD bulls seem to have triggered a failed breakout above the 200-day moving average and reinstated the previous daily bearish "evening star" pattern beneath resistance at 1.0387.

Only a sustained upside confirmation above key resistance at 1.0405/11 would suggest an extended recovery into 1.0753 (28th Oct peak).

Our cycle analysis remains bearish and favours downside pressure back into 1.0146 (09th Jan low) and parity, then 0.9862 (15th Dec low).

Keep in mind that such a move would signal a break from the multi-month distribution pattern and the rate’s 3-year uptrend (see bottom-left chart insert).

Elsewhere, the Aussie dollar is weakening sharply against neighbouring New Zealand. The rate’s multi-month trading range is pressuring lower through its 200-day MA which is currently trading at 1.2957. Expect further setbacks over the multi-day horizon into 1.2834 and 1.2319.

The Aussie dollar is holding steady against the Japanese yen, while still maintaining its larger contracting trading range. Watch for key support at 76.98 to unlock further downside into 74.81. Such a scenario would signal further unwinding of global risk appetite.

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