After losing the 1.0350 line and falling to a 3 month low, AUD/USD traded in a well defined range. Recent pressure sent it to test the next significant support line, but the pair still hesitates before making break. Will it happen soon?
1.0350 provided support for the pair during December, and the break below this line sent the pair to test the 1.0287 line, which was a swing low in November. The 1.0287 didn’t prove to be very strong, but 1.0350 did show some strength by switching very quickly to resistance.
The next support line is 1.0236 , which was a swing low in October 2012. AUD/USD fell as low as 1.0241 at the time of writing, and didn’t attempt to break lower.
If this line is broken, the next significant line of support is 1.0150, which is a very strong line – it worked as a cushion in early October, and the pair got close to this line also in September. This is the bottom border of the wide trading range the Aussie has traded in during the past 7 months. The upper border is 1.06.
The weakness of the Australian dollar comes from the domestic economy: manufacturing, retail sales and the housing sector are all slumping. The Aussie did not enjoy the accelerated Chinese activity and the higher commodity prices.
For more, see the AUD/USD forecast.
And here is another technical outlook from James Chen: AUD/USD Falling Towards Key Support within Trading Range
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