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AUD/USD  was up slightly on the week, despite  dropping close to the 1.04 level. The pair closed the week at 1.0575.  The  upcoming week  has  five  releases.  Here is an outlook for the Australian events, and an updated technical analysis for AUD/USD.

Updates: AUD/USD climbed above 1.06, trading at 1.0601. CB Leading Index was up a strong 1.1%, its best reading since October 2009. AUD/USD dropped sharply,  dropping below  the 1.05 line and trading at 1.0489. MI Leading Index was up by 0.6%, a five-month high. AUD/USD continues to weaken, trading at 1.0378.

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

  1. RBA Gov Stevens Speaks:  Monday, 1:o0. Anytime the head of  the central bank speaks, analysts look for clues as to future  monetary policy. A speech that is more  hawkish than the markets expect  is bullish for the aussie.  
  2. CB Leading Index:  Monday,  23:00. This  composite index is comprised of seven economic indicators.  The index rose a modest 0.2% in February. Will the indicator stay in positive territory  in the March reading?
  3. Monetary Policy Meeting Minutes:  Tuesday, 00:30.  This report is issued monthly, and summarizes the most  recent meeting of the RBA Reserve Bank Board. The report is significant in that it discusses  the  central bank’s  monetary policy; in particular, the factors and conditions that led to the bank’s most recent interest  rate decision.
  4. MI Leading Index: Tuesday, 23:30. This  composite index is made up of  nine economic indicators. The index  was up a healthy 0.5% in  February, its best reading since  October 2011.  Another strong reading this month could give a boost to the Australian dollar.
  5. Chinese HSBC Flash Manufacturing PMI: Thursday, 2:30.   Traders should keep an eye on this important index, as China is Australia’s number one trading partner. The index came in at 49.7 in February.  If the index can crosss the critical 50 level, this would indicate some  expansion in the Chinese manufacturing sector, which would likely increase the demand for Australian exports, as well as Australian dollars.
*All times are GMT.

AUD/USD Technical Analysis

AUD/USD  opened at 1.0530.  As the dollar strengthened,  the pair dropped  all the way to 1.0423. AUD/USD then recovered, climbing up to 1.0597, and closing  the week at  1.0585, as this resistance line (discussed last week) held firm.

Technical levels from top to bottom:

We begin with the resistance line of 1.1090, which was last tested in August of 2011. Next is 1.1009, just above the psychologically important level of 1.10. This  is  followed by strong resistance at 1.0884. Below, the round  number of 1.08 is providing resistance to the pair. The next line of resistance is at 1.0724.   This is followed by 1.0650, which  has strengthened as a  resistance level.   Next, 1.0585  continues to provide  weak resistance line, as the pair closed the week right  on this  line.  It could  fall on any upward swing by the pair. Below, there is weak resistance at 1.0525.

AUD/USD dropped  as low as  1.0423, as the dollar showed some strength before retracting. The support level of 1.0383 line has been solid in this role since January.  Next, there is support at 1.0320. Below, is the support line of 1.0250. This is  followed  by 1.02, a strong support line. This is followed by 1.0080, which is protecting the all-important parity level.

I am  bearish  on AUD/USD.

AUD/USD managed to blunt the  US dollar’s surge this week, but the trend over the past few weeks has been downwards, as the pair is trading  over  two  cents  lower  since  the beginning of March.  As the US economy continues to gain steam, this downward trend could continue.

Further reading: