After tumbling over three cents two weeks ago, the Australian dollar recovered nicely and regained almost all of these losses. AUD/USD ended the week close to the 0.92 line. It’s a very quiet week ahead, with just 5 releases on the schedule. Here is an outlook of the events and an updated technical analysis for AUD/USD.
Australian Retail Sales and Employment Change disappointed, but the Aussie still managed to post sharp gains against the US dollar, as the latter was broadly weaker due to the absence of pro-taper news.
[do action=”autoupdate” tag=”AUDUSDUpdate”/]AUD/USD graph with support and resistance lines on it. Click to enlarge: 
- NAB Business Confidence: Tuesday, 1:30. Business Confidence has been steadily improving, and climbed to the zero level in the July reading. A reading above zero indicates positive conditions. Will the indicator push into positive territory in the upcoming reading?
- Westpac Consumer Sentiment: Wednesday, 00:30. Improved consumer confidence usually translates into stronger consumer spending, which is critical for economic growth. Consumer Sentiment tends to fluctuate sharply, resulting in estimates which are often well off the mark. After a strong gain of 4.7% in June, the index declined by -0.1% last month. The markets are hoping that the index can get back on track with a gain in the August release.
- Wage Price Index: Wednesday, 1:30. This index has been quite steady and the market estimates quite accurate. The index posted a 0.7% gain in July and the markets are not expecting much of a change in the upcoming release, with an estimate of 0.8%.
- MI Inflation Expectations: Thursday, 1:00. MI Inflation Expectations helps analysts predict actual inflation figures, so this monthly indicator is an important inflation indicator. In July, the indicator jumped to its highest level in a year, with a gain of 2.6%.
- RBA Assistant Governor Guy Debelle Speaks: Friday, 1:30.Debelle with address a financial forum in Sydney. With the RBA fresh of a rate cut, analysts will be closely monitoring Debelle’s speech and looking for any hints as to the central bank’s future monetary policy. A speech which is more hawkish than expected is bullish for the Australian dollar.
AUD/USD Technical Analysis
AUD/USD started the week at 0.8912. The pair then touched a low of 0.8907, as the support level of 0.8893 (discussed last week) held firm. The Aussie showed surprising strength, climbing steadily throughout the week, hitting a high of 0.9215. AUD/USD ended the week close to the 0.92 line.
Live chart of AUD/USD: [do action=”tradingviews” pair=”AUDUSD” interval=”60″/]
Technical lines from top to bottom:
With AUD/USD posting sharp gains, we start at higher levels.
We begin with strong resistance at 0.9748, which acted as a cap in early June.
0.9634 saw action in mid-June, when the pair started a downward slide in which it dropped below the 0.92 line.
0.9549 is the next line of resistance. This is followed by 0.9428. This line had played a support role since late 2011, but was breached in June, and has provided strong resistance since then.
0.9283 saw a lot of action in the month of July, alternating between resistance and support. It is currently providing weak resistance, and could be tested early in the week.
AUD/USD continues to receive support at 0.9180. This line began the week in a resistance role, but could not hold in the face of an impressive rally by the Australian dollar.
0.9041 was providing weak support in the first half of July, but has again gained some breathing room as the AUD/USD trades at higher levels.
The round number of 90 is next. This psychologically important level has provided support since September 2010, but has seen some action over the past few weeks.
0.8893 has been a steady support line since August 2010, as the Australian dollar put together a strong rally which saw it climb above the 1.10 line. It was briefly breached late last week, but is back in a strong support role as the pair has gained ground.
0.8747 is the final support line for now. This line has remained in place since July 2010.
I am bearish on AUD/USD.
The Aussie looked impressive last week, posting sharp gains despite weak domestic data and a rate cut by the RBA. With the AUD/USD losing over three cents the week before last, the volatility could continue, and with the Australian economy continuing to underperform, another strong surge this week by the Australian dollar seems unlikely.
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 USD/CAD (loonie), check out the Canadian dollar forecast.
Share
