• AUD/USD is attempting to form a temporary base.
  • The consolidation/correction in EUR/AUD and GBP/AUD may not be over yet.
  • What is the outlook and the key levels to watch in select AUD crosses?

Rising chances of a slight recovery for the Australian dollar against the US dollar

The AUD/USD is currently hovering near its August lows after an initial failure to break higher in late August. On the 240-minute charts, the 200-period moving average is currently at roughly 0.6500, but a new/minor high made at the end of last month increases the likelihood that it will be tested again.

Zooming out, in recent weeks, AUD/USD has been attempting to hold above quite strong support on a downtrend line from the end of 2022. Any break above the August 30 low of 0.6525 could indicate the start of a material consolidation. That’s because, on higher timeframe charts, including the weekly charts, AUD/USD is looking oversold and is showing tentative signs of fatigue. For more discussion, including fundamentals, see “Australian Dollar Looks to Recoup Losses Ahead of CPI; AUD/USD, AUD/NZD, AUD/JPY,” published August 29.

EUR/AUD: Consolidation within a broadly bullish phase

The fact that the EUR/AUD pair was unable to resume its rise last week may be an indication that the consolidation that began last month is still ongoing. The end-of-August highs of about 1.6880, which coincided with the upper edge of the Ichimoku cloud on the 240-minute charts, marked a difficult obstacle that the EUR/AUD withdrew from.The 200-period moving average, which has been slightly above a horizontal trendline since August (at roughly 1.6635), is a crucial floor area that the cross is currently testing. The likelihood of more losses, initially below 1.6450, could increase with any breach below 1.6635.

The 200-period moving average, which also happens to coincide with a horizontal trendline from the end of August (at roughly 1.9450), not too distant from an uptrend line from June, is being tested by GBP/AUD as it approaches a critical convergence cushion. For the uptrend to resume, a hold above the support zone is essential. A break below would indicate an extended consolidation with a slightly weak bias, though one is not likely. For the positive tendency to return on the upside, GBP/AUD needs to surpass the high of last week at 1.9750.

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