AUD/USD bullish tone fades below 0.77; Trump's 'phenomenal tax' or March hike?

Currently, AUD/USD is trading at 0.7667, down -0.31% or (27)-pips on the day, having posted a daily high at 0.7712 and low at 0.7657.

Today's empty US economic docket allowed market participants to adjust positions and remove risk from their portfolios as there were no Tier 1 or 2 news releases to weigh. Furthermore, next week the RBA Meeting's Minutes could intensify the current mild bearish selling pressure the Australian dollar vs. American dollar seems to build below 0.77 handle.

On the other hand, dollar bulls paused their bullish impetus as the two most relevant risk events are no longer data-linked, meaning Trump's tweets and comments are back in the spotlight being the 'phenomenal tax' his latest hit. Also, an upside tick in the probability to have the Federal Reserve hiking rates in March moved institutions to believe, once again, in the impossible possible. Currently, Fedwatch from the CME Group clocked lower at 13.3% from a previous day 22.1%; that impossible needs now a miracle. 

Finally, the IMF shared a more pessimistic economic outlook compare to RBA's Governor Lowe. Hence, there is evidence to expect a disconnected view as Lowe shared, "the days of further monetary easing are behind' and meanwhile, Australia's household debt keeps building up; what matters the most for a nation?

AUD/USD losing 0.77 handle in consolidation of recent key data events

Historical data available for traders and investors indicates during the last 7-weeks that AUD/USD pair, a commodity-linked currency, had the best trading day at +1.18% (Jan.17) or 89-pips, and the worst at -0.81% (Jan.18) or (61)-pips. As of writing, the US 10yr treasury yields fell from 2.46% to 2.40%, down -1.82% on the day or -0.0445.

Technical levels to consider

In terms of technical levels, upside barriers are aligned at 0.7731 (high Feb.16), then at 0.7777 (high Nov.8) and above that at 0.7834 (high April.21). While supports are aligned at 0.7617 (low Feb.14), later at 0.7512 (100-DMA) and below that at 0.7459 (50-DMA). On the other hand, Stochastic Oscillator (5,3,3) seems to shift south and finally head south. Therefore, there is evidence to expect further Aussie losses in the near term.

On the long term view, if 0.7834 (high April 2016) is in fact, a relevant top, then the upside is limited at 0.7809 (short-term 38.2% Fib). Furthermore, if the RBA has 'no ammo' nor solid reasons to increase rates in 2017, the interest rate advantage should decrease organically as the Federal Reserve continues increasing rates with 3-hikes in the next 16-months. To the downside, supports are aligned at 0.7433 (short-term 23.6% Fib), later at  0.7182 (reverse long-term 61.8% Fib) and below that back to 0.6826 (low Jan.2016).

AUD/USD analysis: holding ground, but sellers above 0.7700 still strong