AUDUSD is leading losses among the majors in today’s Asian session despite reports from Australia coming in better than expected. As of this writing, the currency pair is down by 0.28%, trading around 0.6902.
According to the Australian Bureau of Statistics, the country’s trade balance posted a 8.80 billion AUD in April. This topped expectations which were for a surplus of 7.50 billion AUD. Meanwhile, retail sales for the same month was at -17.7%. Despite consumer spending printing a contraction, this figure was still better than the consensus which was at -17.9%.
It would seem that market participants simply squared their positions after heavily-selling the USD since the start of the week. The dollar’s weakness has largely been attributed to protests happening across the country. However, they have become more peaceful and US President Donald Trump has not deployed the military on its citizens which initially worried investors.
On the weekly time frame, it can be seen that AUDUSD has recently broken resistance at the falling trendline. While this could often be interpreted as a sign that there are buyers in the market, the currency pair is now facing resistance at the 100 SMA.
A closer look at the 1-hour time frame shows a potential double top chart pattern. This is characterized by a market getting rejected at a resistance level twice. For AUDUSD, that was 0.6955. If there are enough sellers to push the currency pair to yesterday’s lows at 0.6855, the double top pattern will have been completed. A strong bearish close below this price could mean that there may be enough sellers in the market to push AUDUSD to its May 29 lows at 0.6618.
On the other hand, a rally above yesterday’s highs at 0.6982 could mean that buyers are still dominating the market. It could indicate that AUDUSD will soon be on its way to 0.7276 where the 200 SMA is on the daily time frame.More content