The Australian dollar slumped badly this week, as AUD/USD dropped almost 300 pips, closing at 1.0174. The upcoming week is very busy, with ten releases, including Retail Sales and Employment Change. Here is an outlook for the Australian events, and an updated technical analysis for AUD/USD. The central bank shocked the markets with a full 0.50% cut to interest rates, as levels dropped to 3.75%. Predictably, this sent the aussie tumbling. In addition, weak employment data out of the Euro-zone has investors looking for safer havens for their funds, away from minor currencies like the Australian dollar. Updates: A host of Australian data on Monday was overshadowed by the election excitement in Europe. The Construction Index posted a weak reading of 34.9, continuing a worrying downward trend in 2012. Building Approvals sparkled at 7.4%, as the indicator posted a four-month high and easily beat the market forcast of 3.2%. Retail Sales also surprised the markets, jumping 0.9% compared to the market forecast of 0.3%. It was the highest level recorded since June 2011. The battered aussie remains below the 1.02 level, as AUD/USD was trading at 1.0189. The Trade Balance recorded a deficit of -1.59B, its worst reading in two years. The government released the Annual Budget, but it failed to stem the aussie’s slide. AUD/USD is dropping, and was trading at 1.0148. The Australian government announced spending cuts in order to deal with budget deficits. The aussie fell sharply on the news. AUD/USD was trading at 1.0064, closer to the crucial parity level. Thursday will see the release of the key employment indicators. The unemployment rate is expected to edge up to 5.3% from the present 5.2%. Employment figures shocked the markets, and the aussie gained some breathing room, as it moved away from the parity level. The Unemployment Rate dropped all the way to 4.9%, a ten-month low. The market estimate stood at 5.3%. Employment Change also looked sharp, with an increase of 15.5K. This was well above the market forecast, which had expected a figure of -4.8K. The aussie improved on the news, rising above the 1.01 level. AUD/USD was trading at 1.0105. AUD/USD graph with support and resistance lines on it. Click to enlarge: AIG Construction Index: Sunday, 23:30. The construction sector is in a deep slump, and there does not seem to be much good news on the horizon. The index recorded a weak reading of 36.2 in April, which was a slight improvement from the March reading. Building Approvals: Monday, 1:30. The indicator slumped badly in April, posting a reading of -7.8%, which was a five-month low. The markets are predicting much better news in May, with an estimate of 3.2%. Retail Sales: Monday, 1:30. Retail sales have been slightly above zero for the past two readings. The May forecast calls for a slight improvement, to 0.3%. ANZ Job Advertisements: Monday, 1:30. Employment advertisements dropped sharply in April, falling to 1.0%. Will the indicator change direction in May? NAB Business Confidence: Monday, 1:30.The index recorded a strong reading of 3 last month. Another solid performance in May will be an important sign of confidence in the economy, and could help the aussie. Trade Balance: Tuesday, 1:30. Trade balance improved slightly in April, but still recorded a deficit of 0.48B. The markets are predicting an extremely weak reading of -1.37B in May. Will the index surprise the markets with a better reading than the forecast? Annual Budget Release: Tuesday, 9:30. Coming on the heels of the surprise interest cut of 0.50%, the annual budget should make interesting reading. Analysts will be looking for guidance as to the government’s view of the health and direction of the economy. Employment Change: Thursday, 1:30. The April reading of 44.0K was much stronger than the market prediction. However, the estimate for May stands on a drop of 4.2K. The markets are also counting on a slight increase in the Unemployment Rate, from 5.2% to 5.3%. Chinese Trade Balance: Thursday, tentative. This key indicator recorded a surplus in April, after a huge deficit in March. The markets are predicting a better reading in May, calling for a surplus of 9.8B. A strong figure could help the aussie, as China is Australia’s number 1 trading partner. Chinese CPI: Friday, 1:30. The monthly inflation figures are very high by Western standards. The previous reading came in at 3.6%, and a similar reading is predicted in May. * All times are GMT AUD/USD Technical Analysis AUD/USD opened at 1.0454. The pair reached a high of of 1.0461, pushing past the resistance line of 1.0230 (discussed last week), as it reached a low of 1.0170. The pair closed the week down sharply, at 1.0174. Technical levels from top to bottom: With AUD/USD dropping sharply, we will adjust our support and resistance lines accordingly. We start with resistance at 1.0724. This line has held firm since early March. This is followed by strong resistance at 1.0650. Next, there is resistance at 1.0525, which saw a lot of movement by the pair in March. Below, 1.0402, which was in a support role last week, was breached this week on the downswing by AUD/USD. It is now providing the pair with strong resistance. Close by, 1.0340 was repeatedly tested in April, and is now in a resistance role. Next, the line of 1.0230, which had held firm in support since January, is now providing weak resistance. This line could see further action if the Australian dollar rebounds. Below, the pair is supported at 1.0080, which is protecting the all-important parity level. This level has not been breached since December 2011, but is looking more vulnerable than earlier in the year. Below parity is the line of 0.9964, a strong support level dating back to December 2011. Next 0.9917 is providing strong support to the pair. The final line for now is 0.9860, which has held firm since last November. I am bearish on AUD/USD. Last week’s surprise interest rate cut hammered the Australian dollar. The deep cut in interest rates signals that the central bank is trying to revive the economy with monetary measures, and this could hurt the aussie in the short term. If key releases this week disappoint the markets, we could see AUD/USD continue to point downward. 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 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 forecast. Kenny Fisher Kenny Fisher 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. Kenny's Google Profile View All Post By Kenny Fisher AUD/USD ForecastMinors share Read Next GBP/USD Outlook May 7-11 Kenny Fisher 10 years The Australian dollar slumped badly this week, as AUD/USD dropped almost 300 pips, closing at 1.0174. The upcoming week is very busy, with ten releases, including Retail Sales and Employment Change. Here is an outlook for the Australian events, and an updated technical analysis for AUD/USD. The central bank shocked the markets with a full 0.50% cut to interest rates, as levels dropped to 3.75%. Predictably, this sent the aussie tumbling. In addition, weak employment data out of the Euro-zone has investors looking for safer havens for their funds, away from minor currencies like the Australian dollar. 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