AUD/USD Forecast Feb. 23-27

The Australian dollar posted modest gains last week, as AUD/USD closed at 0.7836.  This week’s key event is Private Capital Expenditure.  Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The RBA minutes reiterated concern about the health of the Australian economy. In the US, the Fed minutes were dovish in stance, as policymakers raised concerns that a rate hike might hurt the US recovery. Unemployment claims dropped sharply, but manufacturing numbers disappointed.

[do action=”autoupdate” tag=”AUD/USDUpdate”/]

AUD/USD graph with support and resistance lines on it. Click to enlarge:

 

1. Construction Work Done: Wednesday, 00:30. This event is released each quarter, magnifying the impact of each reading. The indicator has posted two straight declines, and another drop is expected in Q1, with an estimate of -0.8%.
2. Wage Price Index: Wednesday, 00:30. The indicator has been very steady, and little change is expected, with a forecast of 0.7%.
3. Private Capital Expenditure: Thursday, 00:30. This is the key event of the week. The indicator  has  posted two straight gains, beating  expectations each time.  The markets are bracing for a decline in the  Q1 release,  with an estimate of -1.3%. Will the indicator  surprise the markets and  beat expectations?
4. Private Sector Credit: Friday, 00:30. Credit levels in the private sector are closely connected to spending by businesses and consumers.   The indicator has been very steady, and the forecast stands at 0.5%.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD started the week at 0.7674 and  dropped to a low  of 0.7740. The pair then reversed directions and touched a high of 0.7849, as resistance held firm at 0.7904 (discussed last week). The pair closed at 0.7836.

Live chart of AUD/USD: [do action=”tradingviews” pair=”AUDUSD” interval=”60″/]

Technical lines from top to bottom:

We  begin with resistance at 0.8313.  This line  has held firm since mid-December.

0.8150 is the next resistance line.

0.7978 was an important cap in January 2007.

0.7904 held firm as the pair pushed higher late in the week.

0.7799 has switched to a support role and is a weak line.

0.7601 is the next support level.

0.7403 has held firm since May 2009. At that time, the Aussie was in the midst of a rally which saw it climb above the 0.94 line.

The final support line for now is 0.7283.

I  am  neutral on AUD/USD.

Although the RBA remains concerned about the economy, recent strong job releases point to an upside for growth and a stronger Aussie. In the US, recent  numbers have been lukewarm of late, but the  markets continue to  bank on a  rate hike sometime in 2015.

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Further reading:

• For a broad view of all the week’s major events worldwide, read the USD outlook.
• For EUR/USD, check out the Euro to Dollar forecast.
• For GBP/USD (cable), look into the British Pound forecast.
• For the Japanese yen, read the USD/JPY forecast.
• For USD/CAD (loonie), check out the Canadian dollar forecast.
• For the kiwi, see the NZDUSD forecast.