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AUDUSD: Technicals And Fundamental Picture

Jul. 10, 2017 7:11 AM ETFXA, CROC
The Hermit Trader profile picture
The Hermit Trader


  • I assess the AUDUSD based on its technical picture, and fundamental factors. I also take a look at iron ore prices, which have a positive correlation with the AUD.
  • In all, I believe we could see much higher prices in the AUD in the weeks to come despite the neutral stance the RBA took up during its recent meeting.
  • Go long AUDUSD at market (0.76), with take profit at 0.80 and stop loss at 0.73.

The Reserve Bank of Australia kept interest rates unchanged at 1.50% last week during its meeting on 4 July. That was largely expected by the market, but the AUD traded lower following the central bank's statement, where the RBA opined that the Australian economy was expected to recover gradually, though consumption growth continues to remain subdued, in part due to slow wage growth and high household debt. In all, the statement was largely neutral, but the markets had perhaps expected a more hawkish slant, given that the Bank of Canada, Bank of England, and European Central Bank had released hawkish statements the week before.


On the weekly chart, the AUDUSD continues to make repeated higher lows, and the currency pair has gone from strength to strength since late 2016, where the pair has gone on to post a double bottom first around 0.68 levels, followed by another double bottom around 0.7150 levels.

Those two anchors have served the currency pair well and have propelled the AUDUSD to test the 0.77 repeatedly, though those levels have proven to be strong resistance. Looking at the technicals, I do believe AUDUSD has the makings to re-test and break the 0.77 resistance levels, and I would not be surprised to see 0.80 again in the pair.



The Australian economy has been recovering well. GDP growth rate has surprised to the upside in the past two quarters, with 1Q'17 growth rate coming in at 0.3% versus 0.2% consensus, and 4Q'16 growth rate coming in at 1.1% versus 0.7% consensus.

Exhibit A: Australia GDP Growth Rate

B) Unemployment Rate

Unemployment rate in Australia has also been improving, with the past three data points in March, April and May either in line or coming in better than expectations.

Exhibit B: Australia Unemployment Rate

This article was written by

The Hermit Trader profile picture
Momentum / Breakout trader. Follow price actionAuthor of charting newsletter http://thehermittrader.substack.com

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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