Following the release of the minutes of the meeting of the US Fed FOMC on Wednesday, which reflected doubts about expedience of the interest rate increase in June, the USD fell against the most currencies. The prices of precious metals and oil also have suspended the decline and even started to grow this morning. Since the beginning of this week the pair AUD/USD has dropped by 180 points from the level of 0.8035 up to 0.7900, where it has been trading now.
On Tuesday, the RBA gave to understand that the interest rates will be rather lowered than raised in future in order to help economic stimulation. Only the increase in investments to the economy can help maintain current level of the interest rates.
Nevertheless, it is expected that investments into the main sector of the Australian economy (mining industry) will reduce by almost 20% during this and the next years. The declining prices of iron ore and slowdown of the Chinese economy (Chinese export fell by 6.4% against expectations of 1.6%), the main economic partner of Australia, will also put pressure on the AUD.
Today at 15:30 (GMT+3) the UX consumer price index will become known. High volatility of the market at that time can affect the pair AUD/USD. Be careful when making transactions.
Support and resistance
On the daily chart the pair is traded near the strong resistance towards the upward correction in the channel (green color) in the zone below the moving average lines ЕМА144 (0.8060) and ЕМА200 (0.8210). Support levels are the moving average of ЕМА50 at the level of 0.7870. OsMA histogram is declining. It is below the zero line, which is a sell signal.
Stochastic is already in the oversold zone. On the four-hour chart support level of the price is 0.7905 (ЕМА144). It is likely that the price will remain in the channel between 0.8270 (38.2% Fibonacci) and 0.7590 (0% Fibonacci) in the medium-term. The narrower zone for opening positions is between 0.7870 (ЕМА50) and 0.8060 (ЕМА144).
Support levels: 0.7760, 0.7840 and 0.7870.
Resistance levels: 0.8010, 0.8060, 0.8120, 0.8210 and 0.8270.
Short positions are recommended after breakdown of the level of 0.7870 with the targets of 0.7840, 0.7760 and 0.7710. Long positions can be opened after breakdown of the resistance level of 0.8010 with the targets of 0.8060, 0.8210 and 08270.