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After reaching a two year high, we’ll get to hear the views of the central bank about the economy. Here’s an outlook  for the Australian events and an updated technical analysis for AUD/USD.

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

aud usd forecast September 20-24

The steaming hot Chinese economy contributed to the Aussie’s gains and the two-year high. Also the greenback’s weakness had its role. Will this continue?

  1. Glenn Stevens talks: Monday, 3:30. The head of the RBA always rocks the currency with his speeches. His appearance in Shepparton, very early in the week, is likely to provide a strong start for the week. Any comments about the exchange rate will naturally have a stronger impact.
  2. Monetary Policy Meeting Minutes: Tuesday, 1:30.  The recent rate decision left the Cash Rate unchanged at 4.50%. Nevertheless, the Australian economy is definitely warming up, as seen in employment and GDP. It will be interesting to see if any of the participants considered a rate hike in the near future.
  3. MI Leading Index: Wednesday, 1:30. 9 economic indicators build this composite index. In the past three months, this indicator hardly moved. A rise above 0.5% or a negative outcome will have a strong impact, even though most of the components have already been released.

AUD/USD Technical Analysis

The Aussie began the week with an impressing break above the all-important 0.9327 line, mentioned in last week’s outlook. It then pushed forward and went as high as 0.9469 before losing ground and closing at 0.9359, just under the 0.9366 line.

This 0.9366 line, which was a stubborn peak in April, will be an important pivotal line at the beginning of the week. Above this line, 0.9405 was the 2009 high and serves as the next line of resistance.

Above, the past week’s peak at 0.9469 provides further resistance – this is the current two year high. Even higher, we’re back to lines last seen in 2008.

0.9536 worked as a resistance line when the Aussie was pushing up, and then provided support just before the big collapse. Another line is 0.9650, which capped the pair for several months and was broken only temporarily before the big crisis.

Looking down from current levels, the important 0.9327 now turns into a strong support line. It already worked as such in the past week. Lower, 0.9277 capped the pair before it leaped upwards in a weekend gap and is a minor support line now.

Lower, 0.9220 capped the pair in August and provided support in April – it’s a strong line now. Even lower, 0.9180 is a minor line of support, after working as resistance on the way up.

It’s then followed by 0.9080 which capped the pair in July and 0.90 – the round psychological number.

I remain bullish on AUD/USD.

The Aussie finally unleashed its potential, riding on Chinese figures, risk appetite, and also on its own fundamentals, such as the recent and great jobs report. If there isn’t any major disaster, the pair can continue upwards.

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