The Australian dollar fell sharply on a mix of dovish RBA report and on the Turkish crisis that became global. What’s next? Australia’s jobs report is in the limelight. Here are the highlights of the week and an updated technical analysis for AUD/USD.
The Reserve Bank of Australia left the interest rate unchanged as expected but hit the Aussie later in the week with a relatively dovish outlook. The doubts about inflation were joined by a risk-off sentiment that engulfed markets as the fall of the Turkish Lira could have implications for the euro-zone and the global economy. Trade tensions between the US and China did not help either for the Aussie dollar that dropped to the lowest levels since January 2017.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
*All times are GMT
AUD/USD Technical Analysis
Aussie/USD continued trading in the narrowing wedge before tumbling down and falling below 0.73.
Technical lines from top to bottom:
0.7640 was a stubborn cushion in March and April. The fall below this line proved its strength. 0.7610 was the peak of an upwards move in late May.
0.7560 is the next level to watch after it was the recovery level in early May. 0.7520 was a swing low in late May.
0.7480 capped the pair in mid-July and defends the round 0.75 level. 0.7420 capped the pair twice in mid-July. 0.7360 was a low point in mid-July.
0.7310 is the low of July 2018. The new 2018 low at 0.7280 is the next level to watch.
0.7250 served as a pivotal line in early 2017 and the last line to watch is 0.7160 that was the swing low back then.
Narrowing Wedge Broken
As the chart shows, the pair was trading within a narrowing wedge, or triangle. The break to the downside is a dovish sign.
I am bearish on AUD/USD
Ongoing trade wars and a dovish central bank are a recipe for further falls.
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