AUD/USD: HIGH PROBABILITY OF STRENGTHENING UPWARD DYNAMICS

Current trend

During the Asian session, the AUD/USD pair is trading at 0.6600 on the back of positive macroeconomic data, according to which the number of building permits increased from –0.9% to 1.9% in March, meeting forecasts.

Reserve Bank of Australia (RBA) officials kept interest rates at 4.35%, which initially weakened the currency but by the end of the week, it had recovered lost ground. Commenting on the decision on monetary policy, representatives of the regulator noted the continued high inflation at 3.6%. If the indicator declines slower, the Australian dollar will receive support.

The American currency is declining after the publication of labor market statistics: the number of initial applications for unemployment benefits for the week amounted to 231.0K, higher than the forecast of 212.0K and the previous value of 209.0K. In May, the consumer expectations index from the University of Michigan reached 66.5 points, below expectations of 75.0 points and 76.0 points previously, and the consumer sentiment indicator – 67.4 points, which is also below the estimates of 76.0 points and 77.2 points in the previous period.

This week, investors will await the publication of US inflation data for April: according to preliminary estimates, the consumer price index MoM will be 0.4%. If the forecast is confirmed or the actual value turns out to be higher than the forecast, the American dollar is likely to strengthen against major currencies. Otherwise, investors will sell the dollar, which will lead to a possible increase in the AUD/USD pair and a renewal of the March highs around 0.6657.

Support and resistance

The long-term trend is downward: the price is testing the resistance area 0.6657–0.6629, if it holds, the decline will continue in the long term with the first target at 0.6490. If buyers consolidate above 0.6657, the trend will change upwards, with the target at 0.6752.

The medium-term trend is upward but at the moment the quotes are moving in a correction, if it continues, testing of the key support area of 0.6502–0.6488 is expected, after which long positions, with the target at the May high of 0.6445 are relevant.

Resistance levels: 0.6629, 0.6657, 0.6750.

Support levels: 0.6490, 0.6450, 0.6355.

Trading tips

Long positions may be opened above 0.6655, with the target at 0.6750 and stop loss 0.6615. Implementation time: 9–12 days.

Short positions may be opened below 0.6535, with the target at 0.6450 and stop loss 0.6575.