Is Risk-On Back On? AUDUSD Analysis

In a recent analysis by Greg Michalowski, the AUDUSD currency pair is observed to be experiencing a modest increase of approximately 0.62%. However, this uptick is characterized by a lack of urgency, especially when considering the pair's recent decline. The AUDUSD is often viewed as a barometer for risk sentiment in the market, typically moving lower when equities are under pressure and yields rise, and conversely, moving higher in a risk-on environment where stocks firm and yields ease.

Recent Price Movements

From a high of 0.71866 on March 11, the AUDUSD has fallen to a low of around 0.6834 over the past two sessions, marking a decline of approximately 4.9%. This context is crucial as the current recovery is taking place from a position of weakness.

Technical Indicators

On the technical front, there are some early signs of improvement. The pair has managed to hold the low from the previous day, establishing a short-term floor. Additionally, it has reclaimed the 61.8% retracement level at 0.68603 of the December-to-March rally and has moved above the falling 100-hour moving average, currently near 0.68865. These developments suggest a slight bullish bias.

Key Resistance Levels

Despite these positive indicators, significant resistance remains. The price is still below a critical swing area between 0.6896 and 0.69088, which previously acted as support before breaking down last week. A move above this range would indicate a potential return to the broader trading range, suggesting that the recent break lower may have been a false move. Furthermore, buyers would need to overcome the 50% retracement level at 0.69226 to build stronger confidence in an upward trend.

Conclusion

In summary, while there is a modest risk-on tone in the market today and technical indicators are showing signs of improvement, the AUDUSD still faces significant challenges. Until the price can reclaim the broken swing area and extend above the 50% retracement level, the current recovery is likely to be viewed as corrective rather than a definitive shift back to a bullish trend.