Last week the move of the AUD/USD closely resembled that of other high-yielding currencies as the sentiment among investors was the major determinant of the demand for the Aussie. We went through a rather cumbersome first couple of days, which sent the currency pair to its 200-period moving average, where the selling pressure finally eased and we saw the bulls return to the market. On Wednesday, investors started buying stocks and other risky assets again, partly because they felt that the selling frenzy in the previous couple of session had sent these assets in oversold territory. On Thursday, the buying intensified as ECB’s President Mario Draghi announced that he is willing to do whatever is necessary to preserve the integrity of the Eurozone. The Aussie shot up on the news, breaking the resistance level at its 25-period and 50-period moving averages. The bulls continued to dominate the market on Friday when we saw the AUD/USD pushing above the highs 1.045, which we marked in July 19th. This week we continue to witness strong demand for the Australian dollar as some very encouraging data releases for the local housing market hit the wires. On Monday, the new home sales for June rose by 2.8% after inching 0.7% higher for the previous month. On Tuesday, the much anticipated building approvals declined at a much slower pace than anticipated. Analysts were projecting a sharp drop of 14.6%, but instead the decline was just 2.5%. At the same time the credit issued to consumers and businesses grew at a slower pace than what economists were projecting, but that seem to have almost no adverse effect on the positive sentiment among investors, which bought both Australian stocks and the Australian currency. Today the house price index confirmed the other optimistic data for the sector, which came in earlier in the week. We saw the prices of homes rise by 0.5% against the decline of 0.5% analysts were projecting. After the news was announced the Aussie moved higher paring all of the late-session losses it posted yesterday when the currency entered in a corrective mode. The AUDUSD is currently continuing its advance, now standing at 1.0531 after touching fresh new highs of 1.0543 for the period after late March earlier in the session.
Technically speaking support in the currency pair is provided by the 25-period moving average, which is standing at 1.0472. Resistance, at the same time, is provided by the 1.055 level, where the highs of late March stand. Oscillators are all moving closer to the upper band of their respective ranges with the relative strength index at 68 and the stochastic at 73. The MACD is hovering around the highs it touched earlier in the month and has just started issuing sell signals, which are yet to be confirmed by other technical indicators. On the economic front, we have the retail sales, the trade balance and the AIG services index being announced on Thursday, but investors, who intend to trade the AUD/USD should also monitor the developments coming from the other parts of the world. The Federal Reserve and the European Central Bank’s meetings which are scheduled to be held today and tomorrow respectively are what every trader should keep an eye on.
The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.