AUD/USD – Steadies At Support at 0.84

AUD/USD for Thursday, December 4, 2014

The Australian dollar hasn’t had a great last couple of weeks as it has dropped sharply and fallen to a new multi-year low to start this week around 0.8420 before falling sharply again in the last day to a new multi year low below 0.84.  It has now steadied a little above support around 0.84.  During the middle of last week it enjoyed some solid support from 0.85, however this has given way to overwhelming supply. To start last week it rallied back above 0.8650 again before falling lower throughout the rest of the week. In the week prior the Australian dollar was able to rally higher and bounce off multi year lows around 0.8550 and in doing so has moved back within the previously well established trading range between 0.8650 and 0.88. The resistance level at 0.88 has stood tall on numerous occasions over the last few months. During the last couple of months the Australian dollar has done well to stop the bleeding and trade within this range after experiencing a sharp decline throughout September which saw it move from close to 0.94 down to below 0.8650 and a then eight month low in the process.

Back at the beginning of September the Australian dollar showed some positive signs as it surged higher again bouncing off support below 0.93 and reaching a new four week high around 0.94 however that all now seems a distant memory. The Australian dollar reached a three week high just shy of 0.9480 at the end of July after it enjoyed a solid period which saw it surge higher through the resistance level at 0.9425 to the three week around 0.9480, before easing back towards that level. The Australian dollar enjoyed a solid surge higher reaching a new eight month high above 0.95 at the end of June, only to return most of its gains in very quick time to finish out that week. Since the middle of June the Australian dollar has made repeated attempts to break through the resistance level around 0.9425, however despite its best efforts it was rejected every time as the key level continued to stand tall, even though it has allowed the small excursion to above 0.95.

After the Australian dollar had enjoyed a solid surge in the first couple of weeks of June which returned it to the resistance level around 0.9425, it then fell sharply away from this level back to a one week low around 0.9330 before rallying higher yet again. Its recent surge higher to the resistance level around 0.9425 was after spending a couple of weeks at the end of May trading near and finding support at 0.9220. Throughout April and into May the Australian dollar drifted lower from resistance just below 0.95 after reaching a six month high in that area and down to the recent key level at 0.93 before falling lower. During this similar period the 0.93 level has become very significant as it has provided stiff resistance for some time. The Australian dollar appeared to be well settled around 0.93 which has illustrated the strong resurgence it has experienced throughout this year.

Australia’s economy grew at a slower-than-expected pace in the third quarter, underscoring growing concerns about its outlook and calls for the central bank to undertake easing measures.  GDP for the July-September period rose 2.7 percent on year, government data showed on Wednesday, falling short of a forecast in a Reuters poll for a 3.1 percent gain. This compares with an annual 3.1 percent in the second quarter.  Quarter-on-quarter, GDP climbed 0.3 percent, missing expectations for a 0.7 percent increase and falling from the 0.5 percent rise in the second quarter.  The Australian dollar dived to fresh four-year lows in response, dropping two-thirds of a U.S. cent to $0.8397, its weakest since mid-2010.  “It’s a disappointing performance and there are a lot of challenges facing the domestic economy. The real rate of GDP growth is slowly, and you’ve also got the nominal measures of GDP growth slowing as well with the terms of trade down, corporate profits weakening and household incomes sluggish,” said Matthew Circosta, economist at Moody’s Analytics.

(Daily chart / 4 hourly chart below)

AUD/USD December 4 at 01:10 GMT   0.8412   H: 0.8429   L: 0.8385

AUD/USD Technical

S3

S2

S1

R1

R2

R3

0.8400

—

—

0.8650

0.8800

0.9000

During the early hours of the Asian trading session on Thursday, the AUD/USD is finding support at the 0.84 level after dropping sharply in the last couple of days. Current range: trading right around 0.84.

Further levels in both directions:

• Below: 0.8400.

• Above: 0.8650, 0.8800, and 0.9000.

OANDA’s Open Position Ratios

(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for the AUD/USD has eased back towards 65% as the Australian dollar has steadied around 0.84.  The trader sentiment remains in favour of long positions.

Economic Releases

22:30 (Wed) AU AIG Construction PMI (Nov)

00:30 AU Retail trade (Oct)

00:30 AU Trade Balance (Oct)

12:00 UK BoE MPC – APF Total (Dec)

12:00 UK BoE MPC – Base Rate

12:45 EU ECB – Interest Rates

13:30 EU ECB’s Draghi gives press conference following rate announcement

13:30 US Initial Claims (29/11/2014)

15:00 CA Ivey PMI (Nov)

* All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.