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AUD/USD Technical Analysis: Monthly Trend Support at Risk

AUD/USD Technical Analysis: Monthly Trend Support at Risk

Ilya Spivak,

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Australian Dollar drops to monthly trend support after soft 1Q CPI data
  • Waiting for improved risk/reward to sell in line with long-term trend

The Australian Dollar turned lower against its US counterpart as expected after putting in a bearish Evening Star candlestick pattern. Prices are now challenging support capping the downside since early March. The move lower followed a disappointing set of first-quarter CPI figures.

Near-term trend line support is at 0.7549, with a break below that on a daily closing basis opening the door for a test of the 38.2% Fibonacci retracement at 0.7450. Alternatively, a reversal back above the 14.6% level at 0.7688 paves the way for a challenge of the 38.2% Fib expansion at 0.7834.

Risk/reward considerations argue against taking a short position in line with our 2016 fundamental forecast as prices sit squarely at support. We will remain on the sidelines for now, waiting for an actionable opportunity to sell AUD/USD to present itself.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.