AUD/USD Recovery Reaching Crucial Juncture

Key Highlights

  • The Australian Dollar recovered nicely and moved above 0.7080 against the US Dollar.
  • There was a break above a major bearish trend line at 0.7010 on the 4-hours chart of AUD/USD.
  • Australia’s Building Permits in Nov 2018 declined 9.1% (MoM).
  • The US Initial Jobless Claims for the week ending Jan 05, 2019 will be released today, which is forecasted to decline from 231K to 225K.

AUDUSD Technical Analysis

After a significant decline, the Australian Dollar found support at 0.6740 against the US Dollar. The AUD/USD pair bounced back and broke the 0.6900 and 0.7000 resistance levels.

AUDUSD Technical Analysis Aussie Dollar US Dollar

Looking at the 4-hours chart, the pair gained momentum after it broke the 0.7000 resistance. Buyers were successful in pushing the pair above the 61.8% Fib retracement level of the last drop from the 0.7246 high to 0.6739 low.

Moreover, there was a break above a major bearish trend line at 0.7010 on the same chart. The pair even settled above the 0.7080 resistance and the 100 simple moving average (red, 4-hours).

The pair is now placed above the 76.4% Fib retracement level of the last drop from the 0.7246 high to 0.6739 low. However, it approaching a significant resistance near the 0.7220-0.7240 zone.

If the pair struggles to surpass the 0.7220-0.7240 resistance zone, it could start a downside correction. An initial support is at 0.7100, followed by the 0.7080 level and the 100 simple moving average (red, 4-hours).

Recently in Australia, the Building Permits report for Nov 2018 was released by the Australian Bureau of Statistics. The market was looking for a decline of around 0.5% in Nov 2018, compared with the previous month.

However, the result was even disappointing as there was a sharp 9.1% drop in the Building Permits. The yearly change was also disappointing, as there was a 32.8% decline, more than the last -13.4%.

However, the AUD/USD pair did not react much to the news, but it seems like it may struggle near the 0.7220-0.7240 resistance area in the coming sessions.

Economic Releases to Watch Today

  • US Initial Jobless Claims – Forecast 225K, versus 231K previous.
  • Canada’s New Housing Price Index for Nov 2018 (MoM) – Forecast 0%, versus 0% previous.

Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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