Key Highlights
- The Aussie Dollar failed to surpass the 0.7200 barrier and declined recently against the US Dollar.
- There is a major bearish trend line in place with resistance at 0.7190 on the 4-hours chart of AUD/USD.
- Australia’s CPI in Q4 2018 increased 0.5% (QoQ), more than the 0.4% forecast.
- Today, the Fed Interest Rate Decision is scheduled (Forecast 2.5%, versus 2.5% previous).
AUDUSD Technical Analysis
This past week, the Aussie Dollar made a solid upward move from the 0.7100 support against the US Dollar. The AUD/USD pair broke the 0.7120 and 0.7150 resistance levels to move into a positive zone, but it struggled to clear the 0.7200 level.
Looking at the 4-hours chart, the pair spiked above the 0.7200 level and formed a high at 0.7203. Later, it corrected lower and declined below the 38.2% Fib retracement level of the recent wave from the 0.7075 low to 0.7203 high.
However, the decline was protected by the 0.7140 level and the 50% Fib retracement level of the recent wave from the 0.7075 low to 0.7203 high. More importantly, the pair stayed above the 200 simple moving average (green, 4-hours).
On the upside, there is a strong hurdle formed near 0.7200 and a major bearish trend line with resistance at 0.7190 on the same chart. Therefore, a proper break above the 0.7200 resistance is must for an upside extension towards 0.7250. If not, there is a risk of a break towards the 0.7100 support.
Fundamentally, the Australian Consumer Price Index for Q4 2018 was recently released by the RBA and republished by the Australian Bureau of Statistics. The market was looking for an increase in the CPI by 0.4% in Q4 2018, compared with the previous quarter.
The actual result was better than the forecast as there was a 0.5% rise in the CPI. Looking at the yearly change, the Australian Consumer Price Index increased 1.8%, more than the 1.7% forecast, but less than the last 1.9%.
Overall, AUD/USD is facing an uphill task, but today’s Fed Interest Rate Decision might impact the market and major pairs like EUR/USD, GBP/USD, AUD/USD and USD/JPY.
Economic Releases to Watch Today
- German Consumer Price Index Jan 2019 (Prelim) (YoY) – Forecast +1.6%, versus +1.7% previous.
- German CPI Jan 2019 (Prelim) (MoM) – Forecast -0.8%, versus +0.1% previous.
- Euro Zone Services Sentiment Jan 2019 – Forecast 11.1, versus 12.0 previous.
- Euro Zone Industrial Confidence Jan 2019 – Forecast 0.5, versus 1.1 previous
- Euro Zone Economic Sentiment Indicator Jan 2019 – Forecast 106.8, versus 107.3 previous.
- US ADP Employment Change Jan 2019 – Forecast 175K, versus 271K previous.
- Fed Interest Rate Decision – Forecast 2.5%, versus 2.5% previous.
