The market took its time to digest last week’s good Australian news, but now it finally made the break above the stubborn resistance line. Update on this strong currency.
AUD/USD finally broke above the stubborn resistance line of 0.9090 for the first time after 6 weeks. The pair currently trades at 0.9130, settling above the line.
After dropping below 0.9090 on January 21st, there were immediate attempts to break above this line, but they failed. A similar attempt was made just on Friday, after the American NFP, but the pair stopped exactly at this line.
Traders returned to the markets with risk appetite, selling the dollar. This is what made the final push above 0.9090. The next line of resistance is at 0.9170. It served as a support line at the beginning of the year, before the Aussie fell to the lower range that it just escaped.
Further above, 0.9327 continues to be the strongest resistance line – being tested many times between October and January, and only breached once for reaching the 2009 high of 0.94.
Strong Australian fundamentals
The Aussie enjoyed two great releases last week. The first was the rate decision – Glenn Stevens lifted the Australian interest rate for the fourth time to 4%. Although this was generally expected, it still widens the big gap between Australia and the rest of the world.
The second event was also predicted – the Australian economy grew by 0.9% in Q4. Also here, this is a great growth rate, and it shows the strength of the economy. The Aussie reacted cautiously to these events, but now it finally made the break.
This week’s major release comes from the job market – Australia is expected to see a small gain in jobs and a stable unemployment rate – 5.3%. In the past four months, the employment figures beat economists’ expectations again and again.
Two months ago, great figures weren’t enough to fight the dollar and the strong resistance line of 0.9327. Will this week mark a breakout of the Aussie? We’ll see…
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