AUD/USD: in July - in negative territory

AUD/USD: in July - in negative territory

11 July 2017, 13:16

Despite the growth of the third trading session in a row, the pair AUD / USD has been trading on negative territory since the beginning of the month. As you know, last week the Reserve Bank of Australia left the interest rate unchanged at 1.50%, which has been at this level since August of last year. RBA Governor Philip Lowe held to neutral rhetoric, saying that the growth rate of wages remains low and "probably will be so for some time".

At the same time, the US dollar keeps the positions won earlier in the foreign exchange market. A number of positive macroeconomic data received from the US last week indicates a stable recovery of the economy and the labor market in the United States.

The number of new jobs in the non-agricultural sector in June grew by 222,000 in the US (the forecast was +174,000 new jobs). The estimates for May and April are also revised upwards.

The index of supply managers (PMI) for the US service sector in June, according to the Institute of Supply Management (ISM), was 57.4 compared to 56.9 in May. The service sector accounts for the largest part of US GDP, and the fact that in June the growth of business activity accelerated in this area, indicates a positive momentum for growth in the US economy.

This week, market participants will closely follow the statement (on Wednesday 10:00 (GMT) and on Thursday 14:00 (GMT)) of the chairman of the Federal Reserve, Janet Yellen. If, in her report to Congress, she confirms the Fed's intention to adhere to the planned tightening of monetary policy, the strengthening of the US dollar will continue.

Today, another representative of the Fed, Fed President San Francisco Williams, said that the pace of growth in wages and inflation in the US coincide with his predictions, and another increase in rates still fits into a "reasonable baseline scenario".

While the RBA says that "the strengthening of the Australian dollar will complicate the adjustment of the economy," and "the continuation of rates unchanged corresponds to the goals of GDP, inflation" in Australia, the Fed systematically tightens monetary policy in the US. The difference between the monetary policy of the Fed and the RBA will be an important fundamental factor that stimulates the sale of the AUD / USD pair.

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Support and resistance levels

In general, the positive dynamics of the AUD / USD pair persists while it is trading above the key support level of 0.7530 (EMA200, EMA144 on the daily chart).

At the moment, the pair AUD / USD is trading on the short-term balance line 0.7608 (EMA200 on the 1-hour chart) and is trying to develop positive dynamics within the short-term upward channels on 1-hour and 4-hour charts.

Only in case of breakdown of short-term support levels of 0.7585 (EMA144 and the bottom line of the uplink on the 4-hour chart), 0.7570 (EMA200 on the 4-hour chart) can we speak of the predominance of the downside dynamics of the AUD / USD pair.

The fastening above the local resistance level 0.7635 will create prerequisites for the further growth of the AUD / USD pair.

In case of the development of the downward dynamics and breakdown of the key support level 0.7530 (EMA200, EMA144 on the daily chart), the bearish trend will again prevail in the dynamics of the AUD / USD pair. In this case, the targets will be the levels of 0.7460 (the Fibonacci level is 23.6% of the correction to the wave of decline in the pair since July 2014, the minimum wave is near 0.6830), 0.7420, 0.7375, 0.7330 (November and May lows).

Support levels: 0.7608, 0.7585, 0.7570, 0.7530, 0.7500, 0.7460, 0.7420, 0.7375, 0.7330

Resistance levels: 0.7635, 0.7710, 0.7780, 0.7840


Trading Scenarios

Sell ​​Stop 0.7590. Stop-Loss 0.7630. Take-Profit 0.7570, 0.7525, 0.7460, 0.7445, 0.7420, 0.7375, 0.7330

Buy Stop 0.7630. Stop-Loss 0.7590. Take-Profit 0.7640, 0.7710, 0.7780, 0.7840


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