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AUD/USD: development of correction to previous growth

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  • AUD/USD: development of correction to previous growth

    Current trend

    As part of the growth of AUD/USD from mid-August to the beginning of this month, the "bulls" managed to break through the resistance level of 0.7401, but at the moment the trading instrument has moved into a correction with the target of 0.7292. The uptrend in previous weeks was due to the weakness of USD as a whole, as well as the rise in commodity prices; however, due to the lack of positive news from Australia in the last few days, AUD/USD began to decline again.

    This morning, the Governor of the Reserve Bank of Australia (RBA), Philip Lowe, said that the significance of the information on the increase in interest rates has been greatly exaggerated. Speaking at an event at the Anika Foundation, the official stressed that it will take time to accelerate wage growth, and reiterated that no rate increases are expected until 2024. Lowe also recalled the risks associated with the recent surge in the incidence of the Delta strain of coronavirus. In addition, the fall in iron ore prices was seen as another factor that eroded demand for the commodity-pegged AUD.

    In turn, USD investors are still aiming at medium-term purchases, but their focus is on a bill to raise corporate taxes and taxes for individuals in the United States. Also, market participants are waiting for the US Federal Reserve's reaction to the updated inflation data, which will be published today at 14:30 (GMT+2). Consumer Price Index excluding Food and Energy is expected to be 4.2% on an annualized basis, down 0.1% from the previous value.

    Support and resistance

    The long-term trend is downtrend; however, the instrument is traded in a correction, the target of which is the level of 0.7586. New purchases can be considered from 0.7292.

    The medium-term trend is upward. AUD/USD is approaching the key support of the trend at 0.7317–0.7301, from which new long positions are possible with the target of 0.7457. If the key support for the trend is broken down, then there will be an opportunity to open short positions with the target in the target zone 2 (0.7157–0.7141).

    Support levels: 0.7329, 0.7292, 0.7129.

    Resistance levels: 0.7586, 0.7843.