The Australian dollar dropped in the range as Australian inflation missed expectations. What’s next? Australia’s trade balance and retail sales stand out. Here are the highlights of the week and an updated technical analysis for AUD/USD.
Australia’s quarterly inflation report showed an increase of only 0.4%, below expectations. This will keep the RBA sitting on its hands for some time. In the US, GDP was the highest in four years but below the overhyped expectations. The easing of trade tensions helped the Aussie stabilize.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
*All times are GMT
AUD/USD Technical Analysis
Aussie/USD started the week by finding support at the 0.7360 level (mentioned previously). It then managed to gain a bit more ground.
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. 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.
As the chart shows, the pair is trading within a narrowing wedge, or triangle. This implies a significant break when the pair reaches the limits.
I am bullish on AUD/USD
The current truce in the trade wars is favorable for the Australian dollar, a risk currency.
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