Current trend

The pair AUD/USD continues trading within a descending channel. The pressure on the AUD comes from falling commodities prices, Chinese stock market fall and Greek crisis. In this situation, the Reserve Bank of Australia kept interest rate unchanged at 2%. In accompanying paper, it noted that Australian economy is growing, but the growth is below its medium-term average. Amid slow wages growth the inflation target is going to be reached only in one or two year time. The further AUD decline against the USD was admitted likely and even necessary should the prices of commodities decline further.

On Wednesday, the pair reached its lowest price since May 2009 at 0.7377, but rebounded later because of the cautious FOMC Minutes. The Fed remains careful about the anticipated interest rate hike and waiting for more signals of the economy growth. The pair was supported today by the strong labor market statistics from Australia. The Unemployment Rate stood at 6%, which was better than forecasted, while Participation rate grew to 64.8%.

Support and resistance

At present, the key level for bears is 0.7400 and its breakdown would allow the price to fall towards 0.7260 and 0.7150. Alternative scenario may include the breakout of the level of 0.7500 and price leaving the upper border of the downward channel. Its aim then becomes 0.7565, 0.7615 and 0.7665.

Technical indicators give mixed signals. Bollinger bands are heading downward, the middle MA serves as the support level for the price. Stochastic lines are moving up but may cross each other soon. MACD histogram is in the negative zone, its volumes are falling.

Support levels: 0.7400, 0.7260 и 0.7150.

Resistance levels: 0.7500, 0.7565, 0.7615 и 0.7665.

Trading tips

Open short positions after the price consolidation below 0.7400 with targets at 0.7260 and 0.7150 and stop-loss at 0.7460. Long positions can be opened after the breakout of the level of 0.7500 with targets at 0.7565, 0.7615, 0.7665 and stop-loss at 0.7440.

AUD/USD: AUD decline is necessary




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