AUD/USD: bearish opening gap closed, risk on within ascending bullish channel

AUD/USD opened with a sharp bearish gap down to 0.7430 with the price recovering quickly to current levels as 0.7450.

AUD/USD was boosted last week towards the close by a rebound in oil and copper prices along with broad-based dollar weakness. Te greenback is getting hit on both sides of the political front and by a downturn in the sentiment for the US economy. Fed’s Bullard said last week that he has no objecting to a June hike but he disagrees with steady rate hikes from there and that added to the dollar's decline. 

At the time of writing, the bearish gap is closing and moving back into the ascending channel as early Asia turns risk positive again, shrugging off the weekend N.Korea events and further missile-testing concerns. There is little to go on from scheduled events at the start of the week and focus will stay with the dominant tone being a weaker outlook for the US dollar.

AUD/USD levels

From a technical point of view, Valeria Bednarik, chief analyst at FXStreet explained that more gains are not yet clear, given that the pair ended the week just a handful of pips above a daily descendant trend line coming from this year high at 0.7749, not enough to confirm a bullish breakout of the key level. "In the daily chart, the price has settled also above its 20 DMA, while technical indicators turned north, now entering positive territory." 

AUD/USD: 4hr chart 

In the 4 hours chart, Bednarik explained, " The price stands above a bullish 20 SMA, but technical indicators have lost upward strength within positive territory, while a bearish 200 EMA offers a strong dynamic resistance around 0.7470, with gains above this last opening doors for further short-term recoveries."