AUDUSD is seeing some positive momentum today after touching an almost 35-month trough of 0.7016 on Thursday. However, the upside momentum is weak, with the %K and %D lines of the stochastic oscillator posting a so-far unconvincing bullish cross. Looking at the MACD though, there is no sign yet of an upside correction as the histogram continues to fall further below the signal line in negative territory.
Immediate support is in the 0.7020 region. Breaching this barrier would push the pair to fresh lows towards the 123.6% Fibonacci extension of the upleg from 0.7020 to 0.7393 at 0.9632. Deeper losses would bring into scope the 138.2% Fibonacci extension at 0.6878.
However, if today’s upside drive gathers traction, the bulls could aim to recapture the 0.71 handle, which is the 78.6% Fibonacci retracement. Even stronger gains could lift the pair towards the 61.8% Fibonacci at 0.7163. But the price would need to rise further, beyond the key 0.72 level, taking it above the 50-day moving average and the 50% Fibonacci, in order to change the short-term bearish bias to a neutral or bullish one.
In the medium-term picture, although the bearish structure remains intact, a shift to a neutral outlook is possible in the coming weeks if AUDUSD fails to make a fresh low.