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AUD/USD Correcting Gains But Remains Supported

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Technical analysis of Forex market

Key Highlights

  • The Aussie Dollar surged recently towards 0.6900 against the US Dollar.
  • AUD/USD is correcting gains, but it is likely to find a strong support near 0.6800.
  • Australia’s monthly trade balance was a deficit of $1,242M, down from $-1,628M.
  • The US Manufacturing PMI could decline from 51.1 to 50.7 in Oct 2019 (Preliminary).

AUD/USD Technical Analysis

In the last few days, the Aussie Dollar climbed steadily above the 0.6760 resistance against the US Dollar. AUD/USD pair even broke the key 0.6800 resistance area to move into a positive zone and it is currently correcting gains.

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Looking at the 4-hours chart, the pair settled above the 0.6800 pivot area and the 100 simple moving average (red, 4-hours). It opened the doors for more gains and the pair surged towards the 0.6900 area.

A new monthly high was formed near 0.6883 and the pair recently started a downside correction. It broke the 0.6850 level, plus the 23.6% Fib retracement level of the recent rally from the 0.6723 low to 0.6883 high.

On the downside, there are many key supports near 0.6820 and 0.6800. The main support is 0.6800 (the previous resistance area), which also coincides with the 50% Fib retracement level of the recent rally from the 0.6723 low to 0.6883 high.

Therefore, dips towards the 0.6800 support area could find a strong buying interest. On the upside, the 0.6880 and 0.6900 levels are key resistances, above which AUD/USD may perhaps climb towards 0.7000.

Fundamentally, the Australian Trade Balance report for Sep 2019 was released by the Statistics New Zealand. The market was looking for a trade deficit of $-1,112M compared with the last $-1,565M.

However, the actual result was mostly negative, as the monthly trade balance was a deficit of $1,242M. Moreover, the last reading was revised up from $-1,565M to $-1,628M.

The report stated:

Goods exports rose $216 million (5.1 percent) to $4.5 billion, while goods imports fell $122 million (2.1 percent) to $5.7 billion.

Overall, AUD/USD might correct lower, but the 0.6800 support is likely to prevent heavy downsides. Similarly, EUR/USD and GBP/USD started a downside correction, but trading well above key supports.

Upcoming Economic Releases

  • Germany’s Manufacturing PMI for Oct 2019 (Preliminary) – Forecast 42.0, versus 41.7 previous.
  • Germany’s Services PMI for Oct 2019 (Preliminary) – Forecast 52.0, versus 51.4 previous.
  • Euro Zone Manufacturing PMI Oct 2019 (Preliminary) – Forecast 46.0, versus 45.7 previous.
  • Euro Zone Services PMI for Oct 2019 (Preliminary) – Forecast 51.9, versus 51.6 previous.
  • US Manufacturing PMI for Oct 2019 (Preliminary) – Forecast 50.7, versus 51.1 previous.
  • US Services PMI for Oct 2019 (Preliminary) – Forecast 51.0, versus 50.9 previous.
  • US Initial Jobless Claims – Forecast 215K, versus 214K previous.
  • US Durable Goods Orders for Sep 2019 – Forecast -0.8% versus +0.2% previous.
  • US New Home Sales for Sep 2019 (MoM) – Forecast -0.7% versus +7.1% previous.