AUD/USD Climbed to a 2-Year High; Retracement Is Expected
|The Australian dollar traded gradually higher against the U.S. dollar over since last month as it added almost 7% and is recording the second bullish session. The AUD/USD pair climbed to a fresh more than two-year high at the 0.7988 price level which overlaps with the 200-month SMA and the 200-week SMA. The latter levels seem to be strong obstacles for the traders and we are expecting a retracement following the hit on the SMAs. A correction is possible until the 0.7835 support barrier. On the other side, if the price jumps above the 0.7988 – 0.8010 resistance zone, it will move towards 0.8170.
Technically, on the daily timeframe, the indicators seem to be in contrast. The RSI indicator is developing within the overbought zone above the 70 level, however, the stochastic oscillator dropped below the bullish area and is moving south. In addition, the MACD oscillator rose above its trigger line but lost its strong momentum.
From the fundamental side, the events coming up that may severely impact Aussie’s value are the Australian inflation data for the second quarter, which will be released tonight, and the speech by RBA’s governor Philip Lowe, which will follow. The consumer price index on a quarterly basis, it is expected to be 0.4% versus 0.5% before, while on a yearly basis, is expected to rise to 2.2% against 2.1% the previous quarter. RBA believes that it is very important to keep its domestic currency at low levels in order to help the economy recover and expand. However, AUD/USD appreciated more than 10% since the beginning of the year. If the RBA Governor mentions again that a weak currency is necessary, we may see the pair slipping back from the record high levels, where it has been trading the last days. Contrary, an above forecast CPI and an optimistic economic overview from the central bank’s chief can push the price to penetrate the strong resistance area between 0.7988 and 0.8010, and record new highs.
The pair can be also affected from the Fed policy meeting that ends tomorrow at 18:00 GMT. The central bank is expected to keep funds rate on hold at 1.25%, however, traders are expecting to draw clues that may halt greenback’s decline.
Analysis by JFD Research
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