The Australian dollar regained ground and bounced on Thursday, following Fed-inspired strong fall on Wednesday when the pair dipped to 1 1/2 month low at 0.7086.
Fresh bulls emerged after the greenback lost traction after short-lived rally on Fed’s surprise hawkish steer and boosted by better than expected Australian labor data (37K new employments in Nov vs 20K f/c).
Recovery could be seen as positioning for fresh extension of the downtrend from 0.7393 (03 Dec high) if broken base of widening daily cloud (0.7166) caps.
In addition, 20/55 SMA bear-cross (0.7185), daily cloud top (0.7197) and Fibo 38.2% of 0.7393/0.7085 (0.7200) mark another significant obstacles and reinforce strong resistance zone between 0.7166 and 0.7200, where recovery may face very strong headwinds.
Near-term outlook is expected to remain negative and look for further downside after correction, unless recovery manages to break and close above 0.7200 pivot that would sideline bears and signal stronger correction.
Res: 0.7145, 0.7166, 0.7185, 0.7200
Sup: 0.7108, 0.7085, 0.7020, 0.7000
