Earlier today, disappointing reports came out of Australia but, surprisingly, AUDUSD held steady. The Australian Bureau of Statistics reported that retail sales contracted by 0.5% in December. It was expected that consumer spending would only be at -0.2%. Then, there was the trade balance report which showed a trade surplus of 5.22 billion AUD. The forecast was for a reading of 5.65 billion AUD.
How did AUDUSD react?
On the 15-minute chart, we can see that the currency pair traded 17 pips higher to 0.6760. However, AUDUSD quickly gave up its gains. As of this writing, it is still trading above its opening price.
Read our Best Trading Ideas for 2020.
A closer look at the trade balance report shows that exports continued to grow during the month. It was up by 1.0% at $41.29 billion AUD. The narrower-than-expected trade surplus can be attributed to imports which grew by 2% at 36.07 billion AUD, outpacing exports. It may have also helped that RBA Governor Lowe highlighted inflation and unemployment as the key metrics from which the RBA would base its monetary policy decisions on.
Don’t miss a beat! Follow us on Telegram and Twitter.
AUDUSD Outlook
On the 4-hour time frame, we can see that the recent rally on AUDUSD was enough for the currency pair to break through resistance. By connecting the highs of January 16, January 23, and January 24, we can see that AUDUSD is now trading above the trend line. It even looks like the currency pair is found support on it at 0.6740. By drawing the Fibonacci retracement tool from the low of February 4 to yesterday’s high, we can also see that this price coincides with the area between the 23.6% and 38.2% Fib levels. There are already reversal candles which could suggest that AUDUSD may soon trade higher to yesterday’s highs at 0.6773. If that price does not hold, the next resistance will be at 0.6870 where the currency pair peaked on January 23.
On the other hand, a close below yesterday’s New York session lows at 0.6741 could indicate that there are still sellers in the market. AUDUSD may then fall to this week’s lows around 0.6680.More content
- Follow me on Twitter.
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.