AUD/USD Technical & Fundamental Outlook

Usman Ahmed -

AUD/USD on Wednesday bounced off sharply from 76.4% fib level around 0.9063 (the lowest level since September 4) and is being traded at 0.9115 in Asian Session today. 

Major Support & Resistance Levels

0.9125-0.9135 region is likely to act as strong barrier for Aussie dollar as it is an important channel resistance on four hour chart. A break above this level may open doors for 0.9196 (61.8% fib level) and then 0.9257 (55 MA on H4) and 9300 (100 DMA).

This bounce off, however, seems to be a short term correction of long term bearish trend. The pair has been trading in Head & Shoulder (H&N) price pattern since last few months. 0.9063 (76.4% fib level) is a very major support level for Aussie dollar, if it breaks the pair may resume journey towards 0.8845 (100% retracement) without any break as we do not seen any major hurdle below 0.9063 level.

Accommodative Policy & RBA Intervention

The recent sell-off began last week after the IMF recommended accommodative monetary policy for RBA, stating "With growth currently on the soft side, the real exchange rate still overvalued and weighing on the non-mining sector, and inflation within the target range, monetary policy should remain accommodative."

Later Governor Glenn Stevens, speaking to the Australian Business Economists annual dinner in Sydney last Thursday, said he was "open minded" on intervening to weaken the Australian dollar.

"Our position has long been, and remains that foreign exchange intervention can, judiciously used in the right circumstances, be effective and useful."

Daily Fundamentals

We had two economic reports about Australian Economy in Sydney Session:

  • HIA New Home Sales MoM (Oct) Previous 6.4%, Actual -3.8%
  • Private Capital Expenditure (Q3) Previous 1.6%, Actual 3.6%

There will be a thin US session today due to Thanksgiving holiday; rallies are usually expected in thin sessions because due to low volume, a few large dealers may alone cause high volatility in the market.