AUD/USD gains momentum and approaches last week highs
- A weaker US dollar support AUD/USD gains.
- Pair heads for the highest close since March 26.
The AUD/USD pair failed to break above last week highs but is consolidating gains, around 0.7120, on its way for the strongest daily close since March 26.
Lower DXY behind AUD/USD gains
The US dollar is down across the board, despite higher US yields. The 10-year reached 2.50% while in Wall Street, the Dow Jones is falling 0.45% and the Nasdaq 0.10%. The DXY is losing 0.30%, trading near 97.00.
After Friday’s NFP and ahead of the FOMC minutes and CPI data due on Wednesday, the US dollar weakened in the market. Data released today was mostly ignored: factory orders dropped in February 0.5%, in line with expectations.
After a modest pullback during the Asian session, when AUD/USD bottomed at 0.7085, the lowest since Wednesday, the Aussie then rebounded recovering the lost ground and also boosting the AUD/NZD that rose back above 1.0550, approaching to last week highs.
The critical 0.7130 area
Last week, AUD/USD tested on many occasions the 0.7130 area but failed to break higher. The mentioned level has become the key short-term resistance. A break above would clear the way to more gains with a potential target at 0.7145/50. Above the next resistance might be seen at 0.7165.
If the pair fails to break above 0.7130, it could correct lower to the 0.7100/05 support area. Below the next support is seen at 0.7085 (Apr 8 low) and 0.7060/65 (Mar 25 & 28 low).