The Australian dollar was up slightly against the US dollar last week, climbing above the 1.07 level to close at 1.0730. The upcoming week has six releases. Here is an outlook for the Australian events, and an updated technical analysis for AUD/USD.
AUD/USD made some strong upward moves, taking advantage of continuing trouble in the eurozone, as the euro continues to sag.
AUD/USD graph with support and resistance lines on it. Click to enlarge:
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Home Loans: Tuesday, 00:30. This diffusion index rose above the important 50 level las month, for the first time since October 2011. Another reading in positive territory would be welcome news from the services sector.
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NAB Business Confidence: Tuesday, 00:30. This indicator monitors inflation on a monthly basis, as the government-released CPI is released only once every quarter. The reading in February came in at 0.2%, indicating very little inflation.
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Westpac Consumer Sentiment: Tuesday, 11:30. Job ads were up a whopping 6% in February, the indicator’s best numbers in almost 12 months. If other employment indicators are also strong this month, the aussie could benefit.
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Housing Starts: Wednesday, 00:30. This indicator has posted strong figures over the past two months, well above the market forecasts. However, the March forecast calls for a negligible increase of 0.3%. Will the indicator yet again surprise the market with strong numbers this month?
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MI Inflation Expectations: Thursday, 00:30.
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New Motor Vehicle Sales: Thursday, 00:30. This indicator is released quarterly, and is a duplicate of the Trade Balance indicator. Current Account improved to -5.6B, its best reading since August 2010. However, the forecast in March predicts that the indicator will slip back down to -7.9B.
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*All times are GMT.
AUD/USD Technical Analysis
AUD/USD opened at 1.0693. After dropping slightly to the low of 1.0650, the pair climbed sharply, reaching a high of 1.0856. On its upward swing, AUD/USD breached the resistance levels of 1.0750 and 1.08 (discussed last week). The pair then retracted, closing the week at 1.0731.
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. The important level of 1.08 was breached this week, but is still providing resistance to the pair. Below, the 1.0750 continues to be tested, and could fall on a further upswing by the pair. This is followed by 1.0650, which is a weak line of support. Next is the support line of 1.0585, which was tested in February. Below, is the round number of 1.05, which served as support in May and June and has now resumed that role. It is followed by the 1.0383 line, which has acted as a support level since January.
The round number of 1.03 was severely tested in January, but has now become a major support level as the aussie continues to stay strong against the US dollar. Next is the support line of 1.0250. This is followed by 1.02, a major support level. Below, 1.0080 is providing support, protecting the all-important parity level. Finally, strong support is seen at the round number of 0.99.
I am bullish on AUD/USD.
AUD/USD made have only moved slightly upwards this week, but the pair is becoming more comfortable above the 1.07 level, and even punched across the 1.0850 line. With the Euro slipping badly, the aussie is looking more attractive to investors, and could represent an opportunity for savvy traders.
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.
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