AUD/USD - Relying On Support Level At 0.76

Includes: CROC, FXA, GDAY
by: Dean Popplewell

By Stuart McPhee

AUD/USD for Wednesday, April 15, 2015

After placing great pressure on the resistance level at 0.77 over the last week, the Australian dollar fell heavily in the last 48 hours to back below 0.76 before rallying a little higher back above this new key level. Over the best part of the last couple of weeks, the Australian dollar has relied heavily on support at the 0.76 level after falling away sharply to down below the key 0.77 level over the course of the week prior, and it is relying on this level again presently. Throughout last week it has felt significant resistance from the key 0.77 level which has been severely tested during this period. The AUD/USD has surged strongly higher and made repeated attempts to push through, however the resistance at 0.77 has stood tall and fended off the buyers at this stage. Its next obvious support level is down at 0.7550 and it will hoping to be propped up by it. Its recent decline was from the key 0.7850 level after surging higher to a new two month high above 0.79 earlier a few weeks ago.

For a couple of weeks it moved back and forth from below 0.76 and up to the key resistance level at 0.7850 and higher, before the recent fall. 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.

Australian businesses reported a marked improvement in conditions in March as a pick-up in sales and profitability gave firms the confidence to pump up plans for capital investment, a survey showed on Tuesday. National Australia Bank's monthly survey of more than 400 firms showed its index of business conditions rose four points to +6 in March, above its long run average of +4. That helped lift confidence by three points to +3, so reversing all of February's downturn. The pick-up would be a relief to the Reserve Bank of Australia (NYSE:RBA) which cut rates to record lows of 2.25 percent in February aiming in part to revive "animal spirits" in the business community. "Business conditions recorded a notable lift, with each component - trading, profit, employment - posting an improvement," said NAB's chief economist Alan Oster. "If maintained it could well boost confidence further."

(Daily chart / 4 hourly chart below)

AUD/USD April 14 at 23:50 GMT 0.7614 H: 0.7648 L: 0.7555

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7600 0.7550 - 0.7700 0.7850 0.8200

During the early hours of the Asian trading session on Wednesday, the AUD/USD is easing back slightly towards the support level at 0.76. Current range: trading right around 0.7620.

Further levels in both directions:

• Below: 0.7600 and 0.7550.

• Above: 0.7700, 0.7850 and 0.8200.

OANDA's Open Position Ratios

(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 back close to 55% as the Australian dollar has rallied back above the key support level at 0.76. The trader sentiment remains in favour of long positions.

Economic Releases

  • 00:30 AU Westpac Consumer Confidence (Apr)
  • 04:30 JP Capacity Utilisation (Feb)
  • 04:30 JP Industrial Production (Final) (Feb)
  • 09:00 EU Trade Balance (sa) (Feb)
  • 11:45 EU ECB - Interest Rate
  • 12:30 CA Manufacturing sales (Feb)
  • 12:30 US Empire State Survey (Apr)
  • 13:15 US Capacity utilisation (Mar)
  • 13:15 US Industrial production (Mar)
  • 13:30 EU ECB's Draghi gives press conference after interest rate announcement
  • 14:00 CA BoC interest rate announcement and Monetary Policy Report
  • 14:00 CA BoC - Overnight Rate
  • 14:00 US NAHB Builders survey (Apr)
  • 20:00 US Net Long-term TICS Flows (Feb)
  • WLD IEA release monthly oil market report

* All release times are GMT