Australian Dollar: USD/AUD (AUD=X) dollar breaks through 61 US cents

Australian Dollar: USD/AUD (AUD=X) dollar breaks through 61 US cents

Australian Dollar: USD/AUD (AUD=X) dollar breaks through 61 US cents

The Australian dollar rose through 0.61 US cents through trade on Friday, buoyed by a continued run in improved risk sentiment. The Australian dollar closed the week higher against the greenback, up nearly 1.37% for the day reaching a high of 0.6199, its highest level in the last 10 days. The Aussie regaining nearly 300 bps from its weekly low to retake the 0.61 handle on the back of broad-based selling pressure surrounding the USD which seems to have provided a boost to the Australian currency. Last week we saw a sharp jump in US jobless insurance claims which has added potency to an already sizeable drop in the US dollar since the Federal Reserve introduced new measures that were essentially intended to curb its strength. Locally talk of a third stimulus package in Australia that will support businesses that lose all their customers and would otherwise shutdown during lockdown has helped keep the Aussie strong after a good week. In the continued fight against the Coronavirus (Covid19) on Sunday night Australian Prime Minister Scott Morrison told all Australian not to go out in public with more than one other person while all public spaces including parks, playgrounds, skateparks and outside gyms will be closed from midday tomorrow.

Looking ahead this week in Australia and all eyes will be on Wednesday’s Reserve Banks Monetary Policy Meeting Minutes and Building approvals. Followed by Friday’s release of both AIG Construction Index and Final Retail Sales for the month of February. On the data front in the US this week we will start on Monday with Pending Home Sales for the month of February. On Tuesday we will see the release of US Consumer Confidence. Finally on Friday all eyes will be on the US Unemployment Rate decision. From a technical perspective, the AUD/USD pair is currently trading at 0.6147. We continue to expect support to hold on moves approaching 0.6125 while now any upward push will likely meet resistance around 0.6200.

Key Movers

Last week the Greenback posted its biggest weekly decline against a basket of currencies as trillions of dollars’ worth of stimulus efforts by governments and central banks helped temper a rout in global markets driven by the coronavirus (Covid19) pandemic. The U.S. House of Representatives on Friday approved a $2.2 trillion aid package, the largest in American history, to help people and businesses cope with the economic downturn inflicted by the coronavirus (Covid19) outbreak. The United States now has 85,594 people counted as infected, up from 68,211 on Friday. Unemployment claims jumped to a record 3.3 million last week, from 281,000 the previous week and easily ahead of the previous record of 695,000 set in October 1982, only served to fuel market expectations that the Federal Reserve would pump more money into the economy. US Equities were also down 3.5% on Friday ending a three-day rebound for US equities, the first such streak of gains since mid-February.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 0.64.

The projected upper bound is: 0.63.

The projected lower bound is: 0.59.

The projected closing price is: 0.61.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 black candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 91.4959. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 6 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 44.38. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 4 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 41. This is not a topping or bottoming area. The last signal was a buy 4 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.

Rex Takasugi – TD Profile

FOREX AUD= closed down -0.002 at 0.615. Volume was 30% below average (neutral) and Bollinger Bands were 273% wider than normal.

Open     High      Low     Close     Volume___
0.614 0.618 0.611 0.615 43,910
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 0.59 0.65 0.68
Volatility: 34 20 12
Volume: 112,863 76,824 62,606

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX AUD= is currently 9.1% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of AUD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AUD= and have had this outlook for the last 54 periods.

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