AUD/USD Recovery Facing Uphill Task27 March, 2019 by Aayush Jindal in Market Analysis
- The Aussie Dollar found support near 0.7060 and rebounded above 0.7100 against the US Dollar.
- A crucial bearish trend line is formed with resistance near 0.7160 on the 4-hours chart of AUD/USD.
- The US Housing Starts in Feb 2019 (MoM) fell 8.7%, down from the last +11.7% (revised).
- The US Trade Balance in Jan 2019 could post a deficit of $-57.0B, down from the last $-59.8B.
AUDUSD Technical Analysis
The Aussie Dollar remained well supported above 0.7050 and it recently climbed higher against the US Dollar. The AUD/USD pair broke the 0.7100 resistance, but there is a strong resistance waiting near 0.7160.
Looking at the 4-hours chart, the pair traded as low as 0.7065 and later climbed above the 0.7100 resistance, plus the 200 simple moving average (4-hours, green) and 100 simple moving average (4-hours, red).
The pair even broke the 50% Fib retracement level of the last drop from the 0.7168 high to 0.7065 low. Therefore, there are high chances of more gains above the 0.7140 level.
However, there is a strong resistance waiting on the upside near the 0.7160 and 0.7170 levels. There is also a crucial bearish trend line formed with resistance near 0.7160 on the same chart. A successful close above the 0.7170 resistance might clear the path for more gains above 0.7200.
Conversely, if the pair fails to climb above 0.7170, there could be a fresh decline towards the 0.7100 support or the 100 simple moving average (4-hours, red).
Fundamentally, the US Housing Starts report for Feb 2019 was released by the US Census Bureau, at the Department of Commerce. The market was looking for a sharp decline of more than 10% in the Housing Starts.
The actual result was better than the forecast, with a decline of 8.7% in the Housing Starts (MoM). However, the current reading was disappointing compared with the last increase of 11.7% (revised).
The report added:
Privately‐owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,296,000. This is 1.6 percent (±1.2percent) below the revised January rate of 1,317,000 and is 2.0 percent (±1.7 percent) below the February 2018 rate of 1,323,000.
Overall, AUD/UD may continue to rise, but it is likely to face a strong resistance near the 0.7160 and 0.7170 levels.
Economic Releases to Watch Today
- US Trade Balance Jan 2019 – Forecast $-57.0B, versus $-59.8B previous.
- US Goods Trade Balance Jan 2019 – Forecast $-78.80B, versus $-80.39B previous.