Browsing: AUD/USD Forecast

AUD/USD technical analysis ► review of the major events that will move the Australian Dollar (Aussie) during the upcoming week.

AUD/USD posted sharp losses last week, dropping 150 points. This week’s highlight is CPIHere is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

In the US, housing numbers were steady and continued the positive trend. Unemployment Claims remained steady and easily beat the forecast. In Australia, the RBA minutes indicated that the bank was prepared to lower interest rates if needed, which put pressure on the Aussie.

Updates:

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

AUD_USD_ Daily Chart July25-29..

  1. CPI: Wednesday, 1:30. CPI is the primary gauge of consumer inflation and should be treated as a market-mover. The index surprised by posting a decline of 0.2% in the first quarter, short of expectations. This marked the indicator’s first decline since 2009. CPI is expected to rebound in the Q2, with an estimate of 0.4%.
  2. Trimmed Mean CPI: Wednesday, 1:30. This indicator excludes the most volatile items that are included in Trimmed Mean CPI. The indicator dropped to 0.2% in Q1, short of the estimate of 0.5%. The estimate for Q2 stands at 0.4%.
  3. Import Prices: Thursday, 1:30. Import Prices posted a sharp decline of 3.0% in the first quarter, well below expectations. The markets are expecting a strong rebound in the second quarter, with an estimate of 1.6%.
  4. PPI: Friday, 1:30. PPI measures inflation in the manufacturing sector. The index disappointed in the first quarter, coming in at -0.2%, which was short of the forecast of +0.2%. The forecast for Q2 stands at +0.2%.

* All times are GMT

AUD/USD Technical Analysis

AUD/USD opened the week at 0.7589 and quickly touched a high of 0.7606. The pair then reversed directions and dropped to a low of 0.7440 late in the week, as support held firm at 0.7438 (discussed last week). AUD/USD closed the week at this level.

Live chart of AUD/USD:


Technical lines from top to bottom:

We begin with resistance at 0.7835. This line has provided resistance since April.

0.7692 is protecting the 0.77 line.

0.7597 has strengthened in resistance, as the pair posted sharp losses last week.

0.7438 is a weak support line. It will likely continue to see action early in the week.

0.7334 was a cap in December 2015.

0.7192 is providing strong support.

0.7105 has been a cushion since the end of February. It is the final support level for now.

I am bearish on AUD/USD

The RBA could lower rates if next week’s CPI release is weak. With a Fed rate hike in the second half a decent possibility, monetary divergence favors the US dollar.

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