AUD/USD Outlook December 26-30

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The Australian dollar showed impressive strength against its US counterpart, breaking parity and breaching the 1.02 level, before settling down to close the week at the 1.04 level. The upcoming holiday week is very quiet, with only one indicator release. Here is an outlook for the Australian events, and an updated technical analysis for AUD/USD.

AUD/USD has been marked by great volatility throughout 2011, but traders would be wise to recall that at the  end of the day, the pair has recorded a 1% loss for the year to date. Thus the wild fluctations of the pair are clearly somewhat deceiving, when the movement of the pair is examined with some perspective.

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

Private Sector Credit: Friday, 00:30.  The indicator dropped from 0.5% in October to a reading of 0.2% in November. This was a dissapointing result, as the markets had predicted a reading of 0.4%. The market forecast for December calls for a rise up to 0.3%.

AUD/USD Technical Analysis
The pair opened the week at 0.9961, and quickly breached parity (discussed last week), climbing all the way to 1.0219. The pair gave back most of these gains, closing at 1.0139.

Technical levels from top to bottom:

We begin with the round number of 1.0733, which is strong resistance. Next is the round number of 1.05, which served as support in May and June, and is now in a resistance role. Below is 1.0446, followed by the round number of 1.04, which is a strong level of resistance. The next line of major resistance is 1.0336. Next, the level of 1.0260 is a weak line of resistance, which looks to be breached if the pair continues its upwards movement. Parity may be an important psychological barrier, but has not had a role in providing support or resistance to the movement of the pair. Next is 0.9890, a weak support line. 0.9810 is now providing strong support to the pair. Strong support for the assie can be seen at 0.9660, as well as the round number of 0.95, which was breached only once in 2011. The final support level for now is at 0.9376.

I am neutral on AUD/USD

Economic indicators are clearly stronger in the US than in Australia, which would favor the greenback against the Aussie. However, the aussie rose above parity this week, showing renewed strength and climbing all the way past the 1.02 level.  Will the aussie rally continue?

Further reading:

Get the 5 most predictable currency pairs

About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

3 Comments

  1. Agreed but only for mid-term. Next week we might see a slight drop. In January Aussie CPI will be at very low levels but market sentiment will be positive. The two data will balance themselves pretty well.

  2. Pingback: AUD/USD Outlook Dec. 26-30 | Forex news

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