During the last sessions, trading on the AUD/USD currency pair is quite active. At the same time, a unidirectional movement is not observed. The Australian dollar is consolidating. It should be noted that the main trend on Aussie is still downward since the quotes have fixed below 200 MA (D1 timeframe). In the near future, we do not exclude the continuation of the fall.
Let's consider the key fundamental factors that put pressure on the Australian dollar.
Trade war escalation. China is an important strategic partner for the Australian economy. The trade conflict between Washington and Beijing continues to gain momentum. Earlier this week, the US President Donald Trump said he intended to raise duties on imports of Chinese goods worth $200 billion to 25% instead of 10%. Financial market participants expect a meeting of the US and China leaders at the G20 summit, which will be held in Buenos Aires on November 30 - December 1. Most experts believe that the meeting will not lead to a significant breakthrough in the negotiations. Further escalation of the trade conflict could adversely affect the Australian economy.
Negative dynamics of commodity prices. The Australian dollar belongs to the group of "commodity currencies" because its rate is quite strongly correlated with prices in commodity markets. Such dependence could be most strongly seen in the iron ore and oil prices. Since the beginning of this month, the fall in the WTI crude oil (#CL) and iron ore (#ITI) futures has exceeded 20% and 8%, respectively.
The outlook for rising interest rates by the Fed supports the US currency. Demand for the US dollar rose after Vice Chairman of the Federal Reserve, Richard Clarida, said that he supported a gradual increase in the key interest rate range. Currently, the dollar index (#DX) is testing monthly highs. We recommend paying attention to the publication of the FOMC minutes on November 29 (21:00 GMT+2:00). This report may affect the expectations of financial market participants regarding the further rate of monetary policy tightening.
- Support levels: 0.72000, 0.71500
- Resistance levels: 0.72600, 0.73000, 0.73350
At the moment, the technical pattern on the AUD/USD currency pair is ambiguous. The trading instrument is in a sideways trend. The key support and resistance levels are 0.72000 and 0.72600, respectively. Indicators do not send accurate signals:
- The price has fixed between 50 MA and 200 MA;
- MACD histogram is in the negative zone but above the signal line.
We recommend opening positions from the key levels.
In case of a breakdown and retest of the 0.72000 round level, the AUD/USD quotes may again start declining. The immediate goal for profit taking is the 61.8% correction zone (0.71500). The movement is tending to 0.71000-0.70600.
Alternative option. If the price fixes above the resistance level of 0.72600, it is necessary to consider buying AUD/USD. The movement is tending to 0.73000-0.73300.
Confirmations and entry points to the market should be looked for on lower timeframes. When tracking positions, we recommend using a trailing stop.
by , 2018.11.29
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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