Current dynamics

After failing to break the 0.6450 support level last week, the AUD/USD pair is poised to continue moving towards 0.6550.

The positive momentum comes as Reserve Bank of Australia (RBA) Governor Michelle Bullock said last week that core inflation was still too high to consider cutting borrowing costs. The next policy meeting is on December 10, and if the rate stays at 4.35%, the Australian dollar could strengthen and test 0.6550, 0.6655. In addition, building permits in October were 4.2% m/m, above the 1.2% forecast, and retail sales were 0.6% m/m from 0.4%. However, third-quarter corporate gross profits fell 4.6% m/m from the 0.6% estimate, confirming the ongoing pressure on businesses.

The US dollar is correcting downwards after growing in October-November as a result of the publication of weak macroeconomic statistics: in October, the volume of core orders for durable goods amounted to 0.1% in monthly terms, below the forecast of 0.2%, and the core price index of personal consumption expenditures in the third quarter amounted to 2.10% against 2.20%. For the US Federal Reserve, this indicator is no less important than the consumer price index, and its negative dynamics increases the likelihood of an interest rate adjustment at the meeting on December 18. Thus, according to data from the Chicago Mercantile Exchange (CME) FedWatch Tool, over the week, 67.1% of traders consider the scenario with a change in the cost of borrowing by -25 basis points to be the main one, compared to 52.3% previously.

Support and resistance levels

The long-term trend is upward: in November, the price tested the key trend support level of 0.6450, after which long positions with targets of 0.6550 and 0.6655 became relevant.

The medium-term trend remains downward: last week, quotes tested zone 3 (0.6477–0.6461) and began an upward correction, within which a test of the trend boundary of 0.6582–0.6569 is likely, after which short positions can be considered with a target at last week’s minimum of 0.6435.

Resistance levels: 0.6550, 0.6655.

Support levels: 0.6450, 0.6353.

Trading scenarios

Long positions can be opened from the level of 0.6450 with a target of 0.6550 and a stop-loss of 0.6429. Implementation period: 9-12 days.

Short positions can be opened below the level of 0.6429 with a target of 0.6353 and a stop loss of 0.6457.