USD/CNH stability may help AUD upside case

FXStreet (Bali) - After the unusual volatility in USD/CNH, it appears as though the first signs of stability are returning.

The pair has recovered levels below 6.10 after a rally up towards 6.1050 on Monday, which acted as an initial trigger to weaken the Aussie towards before the impressive recovery seen off range lows at 0.8937.

Market is now keeping an eye on today's CNY fix to determine possible sentiment towards the AUD, which so far has retained a positive undertone holding near highs after breaking above 0.90+ on S&P500 new all time highs.

Should the PBOC decide to set a lower USD/CNY fix, coupled with the improved sentiment as Asian stocks track US equity gains, should be supportive for the interest of the AUD. Besides, no Australian economic data is due Tuesday, which may help the case for the technicals to provide most clues, which at this point, seems to point for upside risks intraday.

According to Valeria Bednarik, Chief Analyst at FXStreet: "In the 4 hours chart indicators show a more lively upward momentum that support another run north in the pair, particularly if price is able to overcome the 0.9060 static resistance level."