Daily Technical Analysis:
AUD/USD has tested SMA5 and SMA10 on Friday. Market SMAs are moving in mix direction with contraction in bullish sequence. While market is moving between SMA10 and SMA15.
RSI is showing slight bullish strength with 52% reading. RSI is moving in straight direction near midlevel (50%), which shows decreasing bullish strength.
Upper, Middle and lower Bollinger Bands have closed expansion and moving in straight direction. It shows decreased upward volatility.
From further trend line analysis, Aussie has closed downtrend channel by closing rate below 1.0420, and now if AUD sustained this 1.0420 (resistance turned support) level, it will be healthy sign for bullish trend.
From above Technical Analysis initial bias remains neutral, where it may attempt low at resistance turned support level at 1.0420, break there may follow bearish move to downward middle band at 1.0385 and then to low at 1.0350. If AUD sustained 1.0420 then on higher side may attempt weekly magnet at 1.0468 and may move to test Friday’s high at 1.0517.
Outlook in AUD/USD has turned mixed after hitting 1.0624. On the one hand, the pair faced strong resistance from the medium term falling trend line struggled to extend recent rally. On the other hand, the pair was supported by broad based weakness in dollar and there was no sustained selling. We’d stay neutral first. On the upside, break of 1.0624 will confirm rally resumption for 1.0852 key resistance and would have some larger bullish implication. Break of 1.0165 will bring another decline inside the medium term consolidation pattern but strong support should be seen well above 0.9588 key level.
The Australian Dollar was higher against the U.S. Dollar on Friday, as the dollar traded lower against most major currencies on Friday after reports surfaced that Spain may be close to requesting bailout assistance from its European neighbors.
The news sparked a risk-on trading session that fueled demand for the euro and other higher-yielding currencies and sent the greenback falling.
The Financial Times reported earlier that Spain is moving closer to requesting a sovereign bailout and is currently working out the details with European Union policymakers.
A bailout would allow the European Central Bank to step in and buy Spanish sovereign debt, which would lower borrowing costs in the large European economy.
Yields on Spanish 10-year bonds this year have repeatedly soared above the 7% threshold considered unsustainable by the markets.
Meanwhile, the dollar continued to see downward pressure stemming from the Federal Reserve’s recent decision to roll out a third round of bond purchases from banks, a monetary policy tool known as quantitative easing.
Here is schedule for today’s important data:
AUD No Data: No major data is expected for the day.
USD No Data: No major data is expected for the day.
AUD/USD was marked by choppy trading, and the Aussie had limited losses against the US dollar this week, as the pair closed around the 1.0450 level. A weak Chinese Manufacturing PMI underscored a slowdown in the Chinese economy. As China’s number one trading partner, these weak numbers are bearish for the Aussie. The upcoming week is very quiet, with just three releases.
The US dollar corrected some of its huge losses in the aftermath of QE3, cutting a losing streak of 4 weeks. Last week US Existing Home Sales surprised traders with a leap to an annualized 4.82 million units from 4.47 million in July, confirming the growth trend in the housing sector. Meanwhile the number of weekly unemployment claims dropped to 382, a mere 3,000 drop from the week before indicating a slowdown in hiring and a struggling job market. In Europe, Spain enjoyed a successful bond auction. German Ifo Business Climate, CB Consumer Confidence US housing data and unemployment claims are the major market-movers on our calendar. Here is an outlook on the major events this week.
AUD/USD Last Week:
AUD/USD opened at 1.0535, which was the high of week, as the resistance line of 1.0557 held firm. The pair then dropped to a low of as 1.0367, before rebounding to close at 1.0442.
Today, AUD/USD opened the day at 1.0444.