AUD/USD - signs of exhaustion, eyes sub-0.77 levels

AUD/USD is extending the overnight retreat from the high of 0.7740 in the Asian session, now trading around 0.77 levels.

Lowe would like it lower

Reserve Bank of Australia’s (RBA) Lowe was out on the wires earlier today stating the Aussie dollar may not be overvalued, but the central bank would surely like it lower.

However, the Aussie’s losses could be better explained by the bullish exhaustion as shown by the daily RSI indicator. The rising wedge formation on the price chart since late January has been accompanied by the falling top formation on the RSI.

Moreover, the pair has rallied close to 600 pips from the December 23 low of 0.7160. Thus, a technical correction cannot be ruled out.

AUD/USD Technical Levels

The spot was last seen trading around 0.7705. Only a daily close above the previous session’s high of 0.7740 would signal continuation of the rally to 0.7778 (Nov 8 high), above which the 2016 high of 0.7835 could be put to test. On the downside, 10-DMA at 0.7685 could offer support, which, if breached could yield a pullback to 0.7649 (Feb 21 low). The next major support is lined up at 0.7609 (Jan 24 high).