Contributor Since 2009
The Australian dollar slipped back after jumping in the previous week. Where will it go next? The rate decision by the RBA and retail sales stand out in the first week of Q4. Here are the highlights of the week and an updated technical analysis for AUD/USD.
The US dollar emerged as a winner from the Fed decision. The central bank raised rates and signaled four more moves until the end of 2019. The removal of the wording about “accommodative policy” initially hurt the greenback, but things turned around afterward.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
*All times are GMT
AUD/USD Technical Analysis
Aussie/USD challenged the 0.7310 level (mentioned last week) but then dropped and found support only at 0.72.
Technical lines from top to bottom:
0.7480 capped the pair in mid-July and defends the round 0.75 level. 0.7420 capped the pair twice in mid-July. 0.7360 was a low point in mid-July.
0.7310 is the low of July 2018. 0.7240 was a swing low in late August and the pair attempted to reach it in mid-September.
The round number of 0.7200 was a temporary low. 0.7150 was a stepping stone on the way down in early September. 0.7085 is the 2018 trough.
Below, we are back to levels last seen in January 2017: 0.7050 could provide some temporary defense against an assault on the round 0.70 level. Even lower, 0.6880 is the next level to watch.
I am bearish on AUD/USD
The Fed’s hawkish policy boosts the dollar and the trade tariffs weigh on risk currencies such as the Australian dollar. Australia’s struggling housing sector does not help.
Our latest podcast is titled Too hot or too cold? The world is watching the Fed
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.