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AUD/USD  dropped 140 pips  this week, closing at 1.0460. The  upcoming week  is very quiet, with just three  releases.  Here is an outlook for the Australian events, and an updated technical analysis for AUD/USD.

Updates: AUD/USD dropped below the 1.05 line, trading at 1.0412. Markets are waiting the release of HIA New Home Sales.  AUD/USD continues to sag, trading at 1.0346

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

  1. RBA Financial Stability Review:  Wednesday, 00:30. This report by the central bank  discusses financial and economic conditions, and analysts look for any hints as to bank’s future  monetary policy. A report that is more hawkish than expected is bullish for the aussie.
  2. HIA New Home Sales:  Friday,  publication time unknown. This  indicator tends to be quite volatile, and last month plunged by 7.2%, its worst reading in over four years. If the indicator  remains below zero in March, it will be the third straight reading in negative territory, and this could hurt the Australian dollar.
  3. Private Sector Credit:  Friday, 00:30.  This  indicator measures the change in credit issued to individuals and  businessses. The indicator has showed little movement  over the past several months, and little change is forecast  for March, with an expected  rise of 0.3%.
*All times are GMT.

AUD/USD Technical Analysis

AUD/USD  opened at 1.0601.  The pair reached a high of   1.0636. It then dropped  all the way to 1.0336, close to the resistance line of 1.0320 (discussed last week). AUD/USD recovered somewhat, closing the week at 1.0461.

The non-mining sectors of the Australian economy are struggling, and the central bank may have to lower interest rates again later in the year.

Technical levels from top to bottom:

We begin with the resistance line of 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 the resistance line of 1.0650, which  continued to hold firm  this week.   The line of 1.0525, which recently was providing resistance to the pair, is now serving in a support role.

AUD/USD broke through the 1.0383 line  as the US dollar showed some strength.  The next line of  support  is at  1.0320, which held firm this week. It could be tested if the aussie continues to sag.  Below, is the support line of 1.0250. This is  followed  by 1.02, a strong support line.  Next, is the support level of  1.0080, which is protecting the all-important parity level.

I am  bearish  on AUD/USD.

AUD/USD managed to partially rebound from  the  US dollar’s surge this week, but the trend over the past few weeks has been downwards. Weaker economic activity in China, Australia’s number one trading partner, is weighing on the aussie.

Further reading: