AUD/USD capped below 0.76 handle, a buy on dips or overdone?

Currently, AUD/USD is trading at 0.7572, up 0.27% on the day, having posted a daily high at 0.7590 and low at 0.7550.

US stock trade with negative bias during opening hour

AUD/USD has been capped on the bid after the USD was extending the broad retreat across the broad at the start of this week and in a continuation of last week's sell-off. "Investors are perhaps reacting to the stark, dark undertones of the President’s inauguration speech Friday and awaiting early action from the new administration to bolster confidence in the Trump reflation trade," explained analysts at Scotiabank.

For the week ahead, we have a holiday-shortened week with Australian Day on Thursday wedged between Q4 CPI on Wed and Q4 Terms of Trade on Friday. "We see upside risk/strong outcomes for both," argued the analysts at TD Securities. In respect to Trump, the main concern seems to be around trade. "Trump seems to have rejected the border adjustment tax that the Congressional Republicans advocated, but taxing imports (tariffs) continues to be touted, " explained analysts at Brown Brothers Harriman.

Trump says he is going to cut taxes massively for middle class and companies - RTRS

AUD/USD levels

Analysts at Commerzbank said that currently they remain unable to rule out a move to the 0.7648 2013-2016 channel (where it should fail). "But even this move will remain within the realms of a correction only. We maintain a negative bias, while capped here."

Spot is presently trading at 0.7573, and next resistance can be seen at 0.7589 (Daily Classic R1), 0.7590 (Daily High), 0.7590 (Yesterday's High), 0.7609 (Weekly Classic R1) and 0.7626 (Daily Classic R2). Support below can be found at 0.7565 (Hourly 20 EMA), 0.7563 (Daily Open), 0.7563 (YTD High), 0.7563 (Monthly High) and 0.7563 (Weekly High).