AUD/USD: Enjoys Some Support Above 0.77

AUD/USD for Monday, February 2, 2015

The last couple of weeks has seen the Australian dollar fall very sharply and break lower from the trading range that had been established roughly between 0.8050 and 0.8200. This has resulted in a new multi-year low near 0.7700 to close out last week. The 0.77 range is currently offering some support to the Australian dollar which has allowed it to consolidate a little and temporarily stop the recent decline. A few weeks ago it made numerous attempts at the resistance level at 0.82 only to be sent back often before finally finishing that week moving through this key level. In doing so it was able to reach a one month high near 0.83 before being sold back down again towards 0.82 as the resistance and selling activity above this level kicked in. Over the Christmas / New Year period, the Australian dollar seemed to have been content with trading in a narrow range below the resistance at 0.82, which continues to remain a key level as it is presently provides resistance.

The Australian dollar experienced a disappointing November and December moving from resistance around 0.88 down to the new lows recently. For a couple of months from September through to November, the Australian dollar did well to stop the bleeding and trade within a range between 0.8650 and 0.88 after experiencing a sharp decline throughout September which saw it move from close to 0.94 down to below 0.8650. Back at the beginning of September the Australian dollar showed some positive signs as it surged higher again bouncing off support below 0.93 and reaching a new four week high around 0.94 however that all now seems a distant memory.

It seems a long way away now but the Australian dollar reached a three week high just shy of 0.9480 at the end of July after it enjoyed a solid period which saw it surge higher through the resistance level at 0.9425 to the three week around 0.9480, before easing back towards that level. The Australian dollar enjoyed a solid surge higher reaching a new eight month high above 0.95 at the end of June, only to return most of its gains in very quick time to finish out that week. Since the middle of June the Australian dollar has made repeated attempts to break through the resistance level around 0.9425, however despite its best efforts it was rejected every time as the key level continued to stand tall, even though it has allowed the small excursion to above 0.95.

Australian housing prices rose strongly in January, but the rise was uneven in a ‘two-tiered’ market. The average rise across the nation’s capital cities was 1.3 per cent, according a CoreLogic RP Data. The result, flagged by the property market analysis firm last week, was included in more detailed figures released on Monday. Prices were highest in Sydney, with a median home value of $723,000, and lowest in Hobart, at $341,000. Sydney also maintained its place at the top of the list of annual price rises, with a gain of 13.0 per cent. Canberra was at the bottom of the list, with annual price falls averaging 0.3 per cent. Annual growth came in at 8.0 per cent, down from a peak of 11.5 per cent early in 2014. “This slower rate of appreciation should provide some comfort to regulators that housing demand is starting to taper, despite the historically low interest rate environment,” CoreLogic RP Data Head of Research Tim Lawless said.

(Daily chart / 4 hourly chart below)

AUD/USD February 2 at 01:30 GMT 0.7785 H: 0.7790 L: 0.7749

AUD/USD Technical

During the early hours of the Asian trading session on Monday, the AUD/USD is trading in a narrow range between 0.7770 and 0.7790 after dropping sharply throughout last week down to new multi-year lows. Current range: trading right below 0.7800 at 0.7790.

Further levels in both directions:

• Below: 0.7700.

• Above: 0.8200, 0.8650, and 0.8800.

OANDA’s Open Position Ratios

(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for the AUD/USD has eased back under 60% as the Australian dollar has dropped sharply back under the resistance level at 0.82 and down to a multi-year low near 0.7700. The trader sentiment remains in favour of long positions.

Economic Releases

• 09:00 EU Manufacturing PMI (Jan)
• 09:30 UK CIPS/Markit Manufacturing PMI (Jan)
• 13:30 US Core PCE Price Index (Dec)
• 13:30 US Personal income & spending (Dec)
• 14:45 US Manufacturing PMI (Jan)
• 15:00 US Construction Spending (Dec)
• 15:00 US ISM Manufacturing (Jan)

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