AUD/USD – Continues to Rest Above Support at 0.77

AUD/USD for Monday, February 9, 2015

For more than the last week now the Australian dollar has steadied well and traded in a narrow range between support at 0.77 and 0.78.  Earlier last week the Australian dollar was on a roller-coaster ride dropping sharply to a new multi-year low below 0.7630 before rallying strongly and moving back up above the 0.77 level and more recently 0.78 before easing back again into its present range.  It is presently relying on support from the current key level at 0.77. Prior to all the recent activity, in the last couple of weeks the Australian dollar fall very sharply and break lower from the trading range that had been established roughly between 0.8050 and 0.8200. The 0.77 range is currently offering some support to the Australian dollar which has allowed it to consolidate a little and temporarily stop the recent decline over the last week.  Several weeks ago it made numerous attempts at the resistance level at 0.82 only to be sent back often before finally finishing that week moving through this key level.  In doing so it was able to reach a one month high near 0.83 before being sold back down again towards 0.82 as the resistance and selling activity above this level kicked in.

Over the Christmas / New Year period, the Australian dollar seemed to have been content with trading in a narrow range below the resistance at 0.82, which continues to remain a key level as it is presently provides resistance. The Australian dollar experienced a disappointing November and December moving from resistance around 0.88 down to the new lows recently. For a couple of months from September through to November, the Australian dollar did well to stop the bleeding and trade within a range between 0.8650 and 0.88 after experiencing a sharp decline throughout September which saw it move from close to 0.94 down to below 0.8650. 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.

It seems a long way away now but 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.

Australia’s central bank lowered its 2015 growth and inflation forecasts and predicted unemployment will rise, underscoring this week’s decision to cut interest rates.  “Growth overall is now forecast to remain at a below-trend pace somewhat longer than had earlier been expected,” the Reserve Bank of Australia said Friday in its quarterly monetary policy statement in Sydney. “The economy is expected to be operating with a degree of spare capacity for some time yet, and domestic cost pressures are likely to remain subdued.”  The RBA reduced its forecast average expansion for this year to between 1.75 percent and 2.75 percent from between 2 percent and 3 percent estimated in November. It lowered projected headline consumer-price growth to 1.25 percent in the year through June from between 1.5 percent and 2.5 percent seen three months earlier.

(Daily chart / 4 hourly chart below)

AUD/USD February 8 at 22:10 GMT   0.7763   H: 0.7797   L: 0.7760

AUD/USD Technical

S3

S2

S1

R1

R2

R3

0.7700

—

—

0.8200

0.8650

0.8800

During the early hours of the Asian trading session on Monday, the AUD/USD is heading lower back under the 0.78 level with eyes on the support around the 0.77 level.  Current range: trading back below 0.7800 around 0.7760.

Further levels in both directions:

• Below: 0.7700.

• Above: 0.8200, 0.8650, and 0.8800.

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 fallen sharply back to near 50% as the Australian dollar has dropped sharply back under the resistance level at 0.82 and down to a multi-year low near 0.7600 before rallying back above the support at 0.77 in the last week.  The trader sentiment remains in favour of long positions.

Economic Releases

23:50 (Sun) JP M2 Money Supply (Jan)

23:50 (Sun) JP METI Tertiary activity index (Dec)

00:30 AU ANZ Job Ads (Jan)

05:00 JP Consumer Confidence (Jan)

05:00 JP Economy Watchers Survey (Jan)

09:30 EU Sentix Indicator (Feb)

13:15 CA Housing starts (Jan)

NZ REINZ House Price Index (9th-13th) (Jan)

WLD OPEC release monthly oil market report

* 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.