AUD/USD Forecast March 18-22

AUD/USD looked very sharp last week, as the pair climbed around two cents. AUD/USD closed just above the 1.04 line, at 1.0408. There are nine releases in the upcoming week. Here is an outlook of the events and an updated technical analysis for AUD/USD.

The Australian dollar was up sharply following outstanding employment data. Employment Change hit a multi-year high, and the Unemployment Rate dipped lower.

Updates: New Motor Vehicle Sales came in at flat 0.0%. RBA Assistant Governor Guy Debelle spoke at an event in Sydney and RBA Deputy Governor Philip Lowe spoke at an economic forum in Sydney. The RBA released its minutes from the  most recent  Monetary Policy Meeting.  The  central bank noted that the economy is responding well to low rates,  and  it will continue with an accommodative monetary policy. The minutes stated that  global market conditions had improved, but  the Australian dollar is still too high.    MI Leading Index will be released later on Tuesday. The Australian dollar has lost ground, as AUD/USD was trading at 1.0368.

MI Leading Index rose to 0.3%, up from 0.2% in the previous reading. The RBA released its quarterly Bulletin and analysts will be combing through the report to get the RBA’s view of the health of the Australian economy. Chinese Flash Manufacturing came in at  51.7 points, above  the estimate of 51.2.  CB Leading Index will be released later on Thursday. The index has not posted a gain since August. AUD/USD has posted sharp gains, and was trading at 1.0438.

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

1. New Motor Vehicle Sales: Monday, 00:30. This indicator is an important measure of consumer confidence and spending, as a new vehicle is a “big   ticket” purchase. The indicator has been erratic, and posted a sharp drop of 2.4% in February. The markets will be hoping for a rebound into positive territory in the March release.
2. RBA Assistant Governor Guy Debelle Speaks: Monday, 22:15. Three senior officials of the RBA will be appearing at public events this week. Assistant Governor Debelle will be speaking in Sydney on the topic of debt markets.
3. RBA Deputy  Governor Philip Lowe Speaks:  Monday, 22:50. Deputy Governor  Lowe will be addressing an economic forum in Sydney. Analysts will be listening closely for any hints with regard to future monetary policy.
4. Monetary Policy Meeting Minutes: Tuesday, 00:30. The minutes provide details of the most recent policy meeting of the RBA Reserve Bank Board. The Board maintained interest rates at the past meeting, and analysts will be interested in reviewing the factors that led to this decision.
5. MI Leading Index: Tuesday, 23:30. This indicator is based on six leading indicators, including  housing and consumer confidence. The index  did not impress in  the previous reading, as it gained just 0.2%. The markets will be hoping for a stronger showing in the upcoming reading.
6. RBA Bulletin: Thursday, 00:30. The RBA releases this report every quarter. It provides a detailed analysis of the RBA’s take on current and future economic conditions and trends. A report that is more hawkish than expected is bullish for the Australian dollar.
7. Chinese Flash Manufacturing PMI: Thursday, 1:45: Analysts are always interested in key Chinese releases, as China is Australia’s most important trading partner. The February release was a major disappointment, as the index slipped to 50.4 points, way below the estimate of of 52.2 points. The estimate for the March release stands at 51.2 points. Will the index meet or beat the forecast?
8. CB Leading Index: Thursday, 23:00. This important index is based on 7 economic indicators, including building approvals and exports. The index has not looked good recently. as four of the past releases have been declines. The markets will be hoping for a turnaround in the March release.
9. RBA Assistant Governor Malcolm Edey Speaks: Friday, 1:45. Assistant Governor Edey will participate in a panel discussion at at financial forum in Melbourne.  If Edey’s remarks are more hawkish than expected, this will be bullish for the Australian dollar.

AUD/USD Technical Analysis

AUD/USD opened at 1.0213 and  touched a low of 1.0211. It was all uphill after that, as the pair barreled higher, pushing all the way to 1.0408.  The resistance line of 1.0418 (discussed last week) held steady as the Aussie posted an impressive rally.

Technical lines from top to bottom:  

With the Australian dollar climbing sharply, we  begin at higher levels.  with resistance at  1.1012. This is followed by  1.0888, which has held firm since August  2011. Next, there is resistance at 1.0789.  We  next  encounter resistance at 1.0739. This line has remained intact, since March 2012, when  the Australian dollar started a steep drop which saw it fall below the 0.96 level. The is followed by 1.0605. The pair has not tested this line since September. Below, there is resistance at 1.0508. This line was breached in January, when the Aussie commenced a downward trend from which  has not fully recovered.  Next, there is resistance at the line of 1.0418. This line was under pressure this week as the pair surged higher, but remained intact.

The pair is receiving support at 1.0371. This is a weak line, and could see more activity early in the week. This followed by 1.0326, which  has reverted to  a support role.  Next, there is strong support at 1.0260. Below, there is support at 1.0174. This line  has held steady since early March.   Next is 1.0080, which is protecting the parity level.  The parity line,  which has  held steady since June, is psychologically significant and provides the next line of support. The final support level for now is at  0.9917.

I am bearish on AUD/USD.

AUD/USD had a stellar week as Australian employment numbers sparkled. However, this appears to be an exceptional release, as other data has been lukewarm or worse. The strong numbers out of the US have not helped the Aussie, so AUD/USD could come under more pressure if US numbers continue to impress. The US dollar has enjoyed broad strength lately, and we  could see the Australian dollar cough up some of last week’s spectacular gains.

The Aussie sometimes moves in tandem with gold. You can trade binary options on gold using this technical analysis.

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 the Japanese yen, read the USD/JPY forecast.
• For GBP/USD (cable), look into the British Pound forecast.
• For USD/CAD (loonie), check out the Canadian dollar forecast.