AUD/USD Forecast May 8-12

AUD/USD [1]posted losses for a third straight week, closing just above the 0.75 line. This week’s key event is the Retail Sales.Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

In the US, the Fed left rates unchanged and sounded optimistic about the economy[2], helping boost the doo,ar against the Aussie. In Australia, the RBA quarterly statement said that wage growth is expected to remain low.


AUD/USD daily graph with support and resistance lines on it. Click to enlarge:

  1. Building Approvals: Monday, 1:30. This indicator tend to show strong fluctuation from month to month. In February, the indicator jumped 8.3%, compared to a forecast of -1.4%. For March, the markets are braced for a decline 3.9%
  2. NAB Business Confidence: Monday, 1:30. This indicator has been softening, as the March reading of +6 marked the weakest gain in 3 months. Will we see a rebound in the April report?
  3. Chinese Trade Balance: Monday, Tentative. China’s trade balance bounced back in March with a surplus of $164 billion, well above the forecast of $76 billion. The upward trend is expected to continue in April, with an estimate of $197 billion.
  4. Retail Sales: Tuesday, 1:30. The indicator declined 0.1% in February, short of the forecast of 0.3%. The markets are expecting better news in March, with an estimate of 0.3%.
  5. Annual Budget Release: Tuesday, 9:30. The budget outlines the government’s forecast for spending and revenue, and should be treated as a market-mover.
  6. MI Inflation Expectations: Thursday, 1:00. This indicator is useful for predicting actual inflation numbers. In March, the indicator edged up to 4.1%.

AUD/USD Technical Analysis

AUD/USD opened the week at 0.7483 and climbed to a high of 0.7556 early in the week. The pair then reversed directions and dropped to a low of 0.7367, as support held at 0.7311 (discussed last week[3]). The pair closed the week at 0.7408.

0.7835 was the high point in April 2016.

0.7741 was a cap in February.

0.7605 has strengthened in resistance as AUD/USD lost ground last week.

0.7513 is the next resistance line.

0.7429 is has switched to a resistance role. It is a weak line.

0.7311 marked a low point in November.

0.7223 is the next support line.

0.7105 has held since March 2016. It is the final support level for now.

I am bearish on AUD/USD

The Fed statement was more hawkish than expected, increasing the likelihood of a June rate hike. The US economy hit some turbulence in Q1, but the economy remains strong, as does sentiment in favor of the US dollar.

Get the 5 most predictable currency pairs[4]

from Forex Crunch

from Online Forex Trading Resource
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