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AUD/USD: Upsides Could Be Limited Above 0.7800

Key Highlights

  • AUD/USD declined from well above 0.7900 and tested 0.7620.
  • A key bearish trend line is forming with resistance near 0.7735 on the 4-hours chart.
  • EUR/USD declined to 1.1835, GBP/USD is consolidating above 1.3800.
  • The US Consumer Price Index could increase 1.7% in Feb 2021 (YoY), up from the last 1.4%.

AUD/USD Technical Analysis

After struggling to clear the 0.8000 resistance, the Aussie Dollar started a fresh decline. AUD/USD broke the 0.7880 and 0.7800 support levels to move into a bearish zone.

Looking at the 4-hours chart, the pair even settled below 0.7800, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours). It traded as low as 0.7622 before correcting higher.

It corrected above the 23.6% Fib retracement level of the downward move from the 0.7838 high to 0.7622 low. The first major resistance is near 0.7730 level. There is also a key bearish trend line forming with resistance near 0.7735 on the same chart.

The 50% Fib retracement level of the downward move from the 0.7838 high to 0.7622 low is also near the trend line. A close above the trend line and 0.7750 could lift the pair further higher. However, the main resistance is still near 0.7800 and the 100 simple moving average (red, 4-hours).

If there is a downside correction, the pair is likely to remain well bid above the 0.7620 and 0.7600 levels. The next major support is near the 0.7550 level.

Looking at EUR/USD, the pair extended its decline towards the 1.1820 support zone. Besides, GBP/USD is consolidating losses and it is still well below the 1.4000 resistance.

Economic Releases

  • US Consumer Price Index Feb 2021 (MoM) – Forecast +0.4%, versus +0.3% previous.
  • US Consumer Price Index Feb 2021 (YoY) – Forecast +1.7%, versus +1.4% previous.
  • US Consumer Price Index Ex Food & Energy Feb 2021 (YoY) – Forecast +1.4%, versus +1.4% previous.
  • BoE Interest Rate Decision – Forecast 0.25%, versus 0.25% previous.
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