FxWirePro: AUD/USD breaks channel top resistance, on track to test 50-DMA at 0.7406

Technical Analysis:

• AUD/USD has broken major channel top resistance at 0.7350, intraday bias higher.
• Momentum studies are bullish, strength in RSI at 56 levels with room for further upside.
• Currently, the pair has edged lower from session highs at 0.7384.
• Upside capped below 61.8% Fib of 0.7145 to 0.7778 rise at 0.7386.
• 50-DMA is next stiff resistance on the upside, break above could see further gains.
• ADX not supportive of current uptrend. We would advise long only on break above 50-DMA.
   

Fundamental Factors:

• Broad-based US dollar weakness and recovery in commodities’ space supporting AUD/USD.
• AUD/USD recovers from session low of 0.7340 after being dumped on weak China inflation data.
• Data released earlier on Tuesday showed China CPI rose 2.1% y/y in Dec, compared to the estimate of 2.2%. 
• Focus now remains on the upcoming US JOLTS jobs data for further impetus.
   

Support levels - 0.7327 (5-DMA), 0.73, 0.7288 (double bottom Jan 6th & 9th)

Resistance levels - 0.7396 (38.2% Fib), 0.7406 (50-DMA), 0.7469 (50% Fib)

Recommendation: We prefer to wait for breakout above 50-DMA to initiate longs.

FxWirePro Currency Strength Index: FxWirePro's Hourly AUD Spot Index was at 56.9448 (Neutral), while Hourly USD Spot Index was at 2.53998 (Neutral) at 0538 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.