Global market risk appetite improved on Friday, putting the US Dollar under renewed pressure and giving commodity currencies a boost.
AUD/USD has been stuck in a narrow consolidating range over the past few weeks. The currency pair is approaching the 50% Fibonacci level of the recent sell-off, and a breakout would signal a continuation of the recovery towards at least 0.7890. In the short-term, AUD/USD is likely to remain range-bound and traders will be looking to trade it accordingly, with heavy resistance expected ahead of the psychologically important 0.80 level.
AUD/JPY is a currency pair worth keeping an eye on as well. Following last week´s sell-off, it has seen a strong rebound and is approaching the upper channel trendline. A test of the 85.80 resistance level appears likely in the near-term, and a clear break above it could pave the way for a rally towards 90.00.
Whether AUD/JPY can gain further momentum will largely depend on the risk appetite in global markets, and whether inflation fears will ease further or persist. To the downside, imminent support is seen at 84.30, followed by the support zone between 83.05 and 83.20.
Meanwhile, the Euro is set to resume its uptrend following a period of consolidation. The outlook for the currency has turned positive amid a vaccination campaign that is gaining momentum and more EU members states preparing to open up their economies; while in the United States a lot of positive news is already priced in, there is more potential for upside surprises in the Eurozone.
EUR/USD bounced off the former key trendline resistance (now support) and is approaching once again the 1.2180 level. Should the currency pair manage to overcome this hurdle, we could see an extension of the rally towards 1.2350.
Gold has been in a steady uptrend since hitting a low in late March, but failed to gain significant momentum. However, this could change as inflation fears make the precious metal more attractive. At the same time, a weaker Dollar has given Gold an additional boost.
In XAU/USD, all eyes are on the $1850 resistance level – the 61.8% Fibonacci level of the January-March decline and also fairly close to the 200 DMA. A daily close above this level would be significant and may trigger further momentum buying. Gold bulls would then set their sights on the $1900 resistance level, and eventually a return to the January high at $1958.
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Today’s key charts focus on oil, where the recent rally has stalled amidst talk of a lift in sanctions and speculation of a production boost.