The AUD/USD rallied well to finish last week moving from below 0.91 back towards the short term resistance level at 0.92. Towards the end of last week, it moved wildly within a 24 hour period from near 0.92 down to 0.9060 very quickly before rallying and moving back towards 0.9150 again.
In the week prior, it moved very well from three year lows to move back above the key level of 90 cents and beyond to a two week high just above 0.92 to finish out last week. A few weeks ago, it fell very strongly and appeared to resume the medium term down trend as it moved to a new three year low near 0.8850 but it reversed very well and looked poised to continue back towards the longer term resistance level at 0.93 before its obstacle at 0.92.
It was only a few weeks ago the AUD/USD moved up towards the 0.93 level again as it continued to place buying pressure on that level. It was during this time it did very well to maintain its price level well above 0.92 as place upward buying pressure on the resistance level at 0.93 however a few weeks ago, it fell sharply to back under 0.92 and started to place pressure on the short term support level of 0.9150.
Over the course of the last month or more the 0.93 level has provided reasonable resistance to any movement higher and this level will likely play a role again should the AUD/USD continue its rally up above 0.92. Throughout July, the AUD/USD spent most of its time trading between 0.90 and 0.93 threatening to break through either level at multiple stages.
The 0.9150 level also became a key level during that time providing both some resistance and more recently support, and this was called upon again a few weeks ago providing some much needed support however it was completely ignored a couple of weeks ago as the AUD/USD fell heavily through it. It was only a month or so ago that many were waiting for the AUD/USD to break below the 90 cents level and then it would have been a matter of how far can it drop. It had continued to drift lower and move towards the 90 cents level, a level not seen for three years. Considering the speed of its decline over the last few months, the last month or so had seen a significant slowing down and almost some consolidation as it has rested well on the support at 0.90 and made its way back to 0.93 on a few occasions.
The last few months have seen the AUD/USD establish a strong medium-term downtrend with lower peaks and lower troughs, as it has moved from near 1.06 down to near 0.90 in that time. In doing so, it has completely ignored any likely support at previous key levels at 1.04, 1.0360 and 1, and more recently the long term support level at 0.97. Up until mid April, the Australian dollar was enjoying its best move higher since October and November last year. After making a solid run higher in the middle of June back towards the key level of 0.97, the AUD/USD has since continued its strong and steady decline moving to below 0.90 and levels not seen since near the middle of 2010. This has seen it experience a significant strong trend that would have caught many people on the wrong side of.
Australia’s dollar declined last week, even before the Reserve Bank releases minutes next week of its Aug. 6 meeting amid speculation the central bank will give guidance on further reductions to interest rates. The extra yield that investors can get by holding Australia’s 10-year government debt instead of U.S. Treasuries was 17 basis points from the lowest in six years. The New Zealand dollar was poised for a second weekly advance as BNP Paribas SA recommended buying the currency on expectations the nation’s central bank will turn more hawkish.
AUD/USD August 18 at 23:20 GMT 0.9193 H: 0.9194 L: 0.9181
During the early hours of the Asian trading session on Monday, the AUD/USD is pushing back up towards the resistance level at 92 cents. Despite its slowing and slight recovery the last month or so, the Australian dollar has been in the middle of a free-fall, as the currency has lost around 15 cents since the beginning of May. In moving through to 1.0580 only a few months ago, it moved to its highest level since January. Current range: trading just below 0.9190.
Further levels in both directions:
• Below: 0.9100 and 0.8850
• Above: 0.9200 and 0.9300
(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)
The long position ratio for the AUD/USD has moved up away from 60% as the Australian dollar has rallied back above 0.91. The trader sentiment remains in favour of long positions.
Economic Releases
- 23:01 (Sun) UK Rightmove House Price Index (Aug)
- 23:50 (Sun) JP Customs Cleared Trade (Jul)
- 01:30 AU New motor vehicle sales (Jul)
- 05:00 JP Leading indicator (Final) (Jun)