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Market Analysis – AUDUSD

The AUD/USD pair is trading at 0.76000, which is slightly higher than the market open but yet to show any real bullish movement. The exchange rate the day before attempted to climb 0.76600, but collapsed very quickly and ended the day at almost 0.50% lower than the market open. We are yet to see a bullish candlestick this week and the asset is not showing any lasting momentum in its attempt to reach the previous low of 0.75616.

Growth will slow as the country emerges from the first phase of recovery from COVID-19, starting a second, slower period, said Stephen Kennedy, Australian Finance Minister. The Senate estimates that the economy has so far recovered by 85% from pre-pandemic levels.

In particular, a gradual curtailment of the JobKeeper assistance program is planned, which means that 100–150K people will stop receiving benefits shortly. The end of the project will be manageable and employment will continue to rise this year, but analysts expect an increase in the number of unemployed in the short term. The unemployment rate has shown positive dynamics in recent months. The index fell to 5.8% in February, while the level of economic activity remained at a record high of 66.1%. In the short term, this supported the Australian dollar, but due to concerns about new infections in Europe and the United States, as well as amid falling oil prices, there is continued strain on the asset.

Lastly, investors are also keeping a close eye on the situation in Queensland, where a new outbreak of coronavirus infection is being observed. Local authorities warned today that they expect the incidence to continue to rise. Currently, the state capital of Brisbane remains under quarantine: 2 million residents of the city must stay at home, with the exception of going to work, getting medical services, shopping for food, and playing sports.

This week, investor’s main focus will be the employment data from the US. Nonfarm Payroll data will be released on Friday. The indicator is expected to grow to 639K in March. The unemployment rate is expected to decline by 0.2% to 6.0%. If the American labor market shows a confident recovery, it may increase investors confidence in the US economy and the US Dollar.

The Dollar in general has strengthened over the last 24 hours, but has declined in the first few hours today’s European session. Investors await the details of the new plan of the US President Joe Biden’s administration to support the economy. It is expected to cost up to $ 3 trillion and will focus on modernizing public infrastructure and achieving higher environmental standards. It is planned to restore and modernize highways, bridges, railway elements, and power lines. The funds will also be invested in technologies to reduce greenhouse gas emissions, the construction of filling stations for e-cars and energy-efficient housing. 

The new package of government support measures has raised hopes among investors for a faster-than-expected economic recovery, but some fear that inflationary pressures will rise. The situation with the coronavirus in the USA is beginning to deteriorate again. Despite the widespread vaccination of citizens, the incidence has recently resumed its growth. President Biden urged state leaders not to ease quarantine measures “too hasty”.

Looking at the price movement of the asset since the 18th of March, we can see in the medium term the asset has shown a clear downward trend. The asset has since attempted to increase on two occasions, on the 22nd and 30th of this month, however, on each occasion the asset has declined to previous or lower price lows. Support and resistance levels are pointed out below:

Resistance levels: 0.7644, 0.7675, 0.7721, 0.7770.

Support levels: 0.7600, 0.7556, 0.7500, 0.7452.

 

Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing investing advice or a recommendation, or an offer of or solicitation for any transactions in financial instruments or a guarantee or a prediction of future performance. Past performance is not a guarantee of or prediction of future performance.

 

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