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Market Analysis – AUDUSD

Today, during the Asian session, the AUD/USD pair continues to move with a bearish trend, developed yesterday, returning to last Friday’s levels and trying to consolidate below the level of 0.7740. The movement of the asset is currently trading downwards, but when looking at the price movement in the longer term we can see both bullish and bearish price movements. The price movement in the longer term seems to be finding resistance mainly at the price region between 0.76898 and 0.77057. Traders are waiting to see if the Federal Reserve will be able to provide the required drive and momentum in the price to break down previous support levels. 

A noticeable pressure on the instrument is exerted by the US Dollar’s correction ahead of the publication of the minutes from the US Federal Reserve meeting. Markets do not expect any noticeable changes in the vector of monetary policy, but they are counting on tougher rhetoric from the regulator, which would reflect the high pace of recovery of the American economy after the coronavirus crisis.

As the economy recovers, many fear a sharp rise in prices, which in part is already happening. Officials had previously stated that inflation growth would be short-term and would not necessitate a rate hike. The volume of increase in taxes on capital gains has not yet been officially announced, but market participants are already talking about the fact that it may lead to a decrease in the investment attractiveness of American business. Brian Deese, chief economic adviser to President Joe Biden’s administration, yesterday tried to calm the market, saying that the new tax will affect only 0.3% of households that earn more than $1 million a year, and the rest “will not feel it”.

Currently, the Australian dollar is influenced by opposite factors. On the one hand, it is supported by the successes in the fight against the coronavirus pandemic. In Australia, the disease has been virtually eradicated and limited to rare outbreaks. The last of these took place in the city of Perth, but today it reopened after a three-day lockdown. Also, the Australian government plans to return foreign students to the country within the next month and continue to partially open the borders. On the other hand, the pressure on the AUD is exerted by the conflict with China, which continues to intensify. Its last round was the refusal of the Australian authorities from the agreements previously concluded with China within the framework of the “Belt and Road” initiative.

This morning, poor Australian economic statistics put additional pressure on the Australian Dollar. Thus, the first quarter consumer price index slowed down from the previous 0.9% to 0.6% QoQ, which was worse than the neutral forecasts of analysts. The core inflation index of the Reserve Bank of Australia dropped to 0.3% QoQ over the same period, which is also worse than market forecasts of 0.5% QoQ. The inflation rate increased from 0.9% to 1.1% YoY, but fell short of the optimistic estimates of 1.4% YoY. 

In addition, this week investors will pay attention to the publication of data on the dynamics of US GDP. Forecasts assume that the US economy will grow 6.5% YoY in Q1 2021 after increasing by 4.3% YoY over the previous period.

The US Dollar is increasing in value today when looking at most currency pairs and the US Dollex Index, which has increased to above 91.00. The Australian Dollar is weakening today against its main competitors including the Pound, Yen, and Euro.

Resistance levels: 0.7770, 0.7804, 0.7848, 0.7900.

Support levels: 0.7700, 0.7675, 0.7636, 0.7600.



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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