AUD/USD – Consolidates Above 0.7950

In the last couple of days the Australian dollar has surged higher however it has run into resistance right around 0.7950 and 0.80 before easing slightly and consolidating in a narrow range around 0.7980.  After a solid start to last week, the Australian dollar eased back towards the key 0.7850 level where it has received some support to close out last week and to begin this week before its recent surge higher. In its early week surge last week, it moved to a three month high just shy of 0.81. Throughout most of the last few weeks the Australian dollar enjoyed a strong surge higher to the three month high at 0.8075. To start last week the Australian dollar looked poised to break through the long standing resistance level at 0.7850 even though this level has stood up tall for several months now. A couple of weeks ago the Australian dollar fell sharply but landed on the previous key level at 0.77 which has offered considerable support since that time. A few weeks ago saw the Australian dollar enjoy a solid week moving off support around 0.76 to reach a three week high just shy of the resistance level at 0.7850. In doing so, it moved through the key resistance level at 0.77.

Since the beginning of March the Australian dollar has relied heavily on support at the 0.76 level. Below 0.76 its next obvious support level is down at 0.7550 and it will hoping to be propped up by it. Back in early March the Australian dollar made a statement and broke down strongly through the key 0.77 level which then provided significant resistance for the following few days. It was also able to enjoy some short term support around 0.7550 which propped it up and allowed it to rally strongly back up to above 0.79. Throughout February the Australian dollar made repeated attempts to move up strongly to the resistance level at 0.7850 however it was rejected every time and sent back easing lower, which is why this level remains significant presently. Just prior to that towards the end of February the Australian dollar moved through the resistance at 0.7850 to reach a new four week high around 0.7900. In the second half of January, the Australian dollar fell very sharply and break lower from the trading range that had been established roughly between 0.8050 and 0.8200.

Back in mid-January it made numerous attempts at the resistance level at 0.82 only to be sent back often before finally finishing that week moving through this key level. In doing so it was able to reach a one month high near 0.83 before being sold back down again towards 0.82 as the resistance and selling activity above this level kicked in. Over the Christmas / New Year period, the Australian dollar seemed to have been content with trading in a narrow range below the resistance at 0.82, which continues to remain a key level as it is presently provides resistance. The Australian dollar experienced a disappointing November and December moving from resistance around 0.88 down to the new lows recently. For a couple of months from September through to November, the Australian dollar did well to stop the bleeding and trade within a range between 0.8650 and 0.88 after experiencing a sharp decline throughout September which saw it move from close to 0.94 down to below 0.8650.

Sales of new homes in Australia jumped in March to their highest since early 2010 as falling mortgage rates and the lure of rising house values drove demand.  The Housing Industry Association (HIA) said its survey of large volume builders showed sales of new homes rose 4.4 percent in March, from February when they increased by 1.1 percent.  Sales of multi-units jumped 11.3 percent in the month, while sales of detached homes rose 2.6 percent.  “The residential construction sector continues to be the main bright spot in the broader domestic economy, with updates to the sector showing its ongoing strength,” said HIA economist Diwa Hopkins.  “Lower lending rates will provide added support to residential construction activity, which is emerging as a key area of growth mitigating the effects of the downturn in mining investment and construction.”  The Reserve Bank of Australia (RBA) trimmed its cash rate to a record low of 2.0 percent on Tuesday, which was quickly followed by cuts to mortgage rates by the major banks.

(Daily chart / 4 hourly chart below)

AUD/USD May 6 at 23:40 GMT 0.7971   H: 0.8030   L: 0.7919

AUD/USD Technical

During the early hours of the Asian trading session on Thursday, the AUD/USD is consolidating in a narrow range between 0.7960 and 0.7980.  Current range: trading right above 0.7950 around 0.7970.

Further levels in both directions:

• Below: 0.7850, 0.7700, and 0.7600.
• Above: 0.7950 and 0.8200.