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%.
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:
- 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 the Australian dollar (Aussie), check out the AUD to USD forecast.
- For the New Zealand dollar (kiwi), read the NZD forecast.
- For USD/CAD (loonie), check out the Canadian dollar.
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