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AUD/USD Likely To Remain Supported On Dips

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Aayush Jindal

Key Highlights

  • The Aussie Dollar started a downside correctionfrom 0.7080 against the US Dollar.
  • AUD/USD is likely to find strong bids near 0.6970or 0.6950 in the near term.
  • The Housing Price Index in May 2019 increased0.1% (MoM), less than the +0.3% forecast.
  • The US Manufacturing PMI in July 2019(Preliminary) could rise from 50.6 to 51.0.

AUDUSD Technical Analysis

This past week, the Aussie Dollar followed a solid bullish path above 0.7000 against the US Dollar. The AUD/USD pair traded as high as 0.7081 and recently started a downside correction.

AUDUSD Technical Analysis Aussie Dollar US Dollar

Looking at the 4-hours chart, the pair failed near 0.7080and a connecting resistance trend line. As a result, there was a bearishreaction and the pair declined below the 0.7060 and 0.7040 support levels.

Moreover, the pair traded below the 50% Fib retracementlevel of the upward move from the 0.6910 low to 0.7081 high. On the downside,there are many key supports near the 0.6970, 0.6980 and 0.6960 levels.

The 61.8% Fib retracement level of the upward move from the0.6910 low to 0.7081 high is likely to act as a strong support, followed by0.6980. The main support is near 0.6950 and a connecting bullish trend line onthe same chart.

If there is a downside break below 0.6950, the pair couldcontinue to decline towards 0.6910 or 0.6900. Conversely, the pair might bounceback above 0.7040 and 0.7050.

Fundamentally, the US Housing Price Index for May 2019 wasreleased by the Federal Housing Finance Agency. The market was looking for a0.3% rise in the Housing Price Index.

However, the actual result was lower than the forecast, theHPI increased only 0.1% (less than the last increase of 0.4%). Looking at theyearly change, house prices were up 5% in May 2019.

The report added:

For the nine census divisions, seasonally adjusted monthly house price changes from April 2019 to May 2019 ranged from -1.0 percent in the East South Central division to +0.5 percent in the South Atlantic division.

The overall market sentiment favored the US Dollar, with strong bearish moves in EUR/USD and GBP/USD. However, AUD/USD might still bounce back unless it breaks the 0.6950 support.

Economic Releases to Watch Today

  • Germany’s Manufacturing PMI for July 2019(Preliminary) - Forecast 45.2, versus 45.0 previous.
  • Germany’s Services PMI for July 2019(Preliminary) - Forecast 55.3, versus 55.8 previous.
  • Euro Zone Manufacturing PMI July 2019(Preliminary) – Forecast 47.6, versus 47.6 previous.
  • Euro Zone Services PMI for July 2019(Preliminary) – Forecast 53.3, versus 53.6 previous.
  • US Manufacturing PMI for July 2019 (Preliminary)– Forecast 51.0, versus 50.6 previous.
  • US Services PMI for July 2019 (Preliminary) –Forecast 51.7, versus 51.5 previous.
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