Trading recommendations
Sell in the market. Stop-Loss 0.7410. Take-Profit 0.7345, 0.7320, 0.7260, 0.7200, 0.7160, 0.7140, 0.7100
Buy Stop 0.7410. Stop-Loss 0.7360. Take-Profit 0.7445, 0.7460
Overview and Dynamics
Investors are a little nervous before the scheduled for Wednesday's press conference of Donald Trump, which causes a decrease in the US dollar in the foreign exchange market due to profit taking. However, the main focus will still be focused on Trump's inaugural speech of 20 January. After winning Trump in the elections, the dollar index rose by 3.8%, and there are fears that the president will be against a large-scale strengthening of the dollar. They should also be more clearly understood policy details of President-elect Donald Trump, in particular with regard to reducing taxes and increase budget expenditures. In this regard, it increases the risk that the dollar could remain under pressure until 20 January.
Meanwhile, the Chinese ambiguous data have come today. In December, consumer price growth slowed in China and ex-works prices growth accelerated more than expected. However, in general, consumer prices and producer prices in China in December in annual terms rose by 2.1% and 5.5% respectively. The data supported the commodity currencies and Pacific region currencies, and especially the Australian dollar.
China is the largest trading partner of Australia and the buyer of its commodities, including iron ore, coal and liquefied natural gas. Today the head of the National Commission for Development and Reform Commission of China Xu Shaoshi said that in 2016 China's GDP probably grew by 6.7%. The pace of China's GDP growth fell slightly, but still remains impressive. The growth of the second largest economy in the world, which is the Chinese economy, has beneficial effects on the development of the economies of China's partner countries, including Australia. And this in turn helps to strengthen the national currency of Australia.
On the other hand, the US dollar will remain the favorite in the currency market in anticipation of more rate rises in the US this year. And it will be one of the main fundamental drivers after the inauguration of Donald Trump on January 20 and in the coming months.
The pressure on the pair AUD/USD will also have a drop in commodity prices on a stronger US dollar and weaker macroeconomic indicators in Australia, coming from the country in recent years. For example, Australia's GDP in Q3 for the first time in five years has decreased compared to the previous quarter (0.5%).
Technical analysis
After the publication of data from the Australian Chinese currency has strengthened. The AUD/USD rose after a decline at the opening of today's trading day and the beginning of the European session, trading near the 0.7370 mark. Indicators OsMA and Stochastic on the weekly, monthly charts are on the side of the sellers. On the daily and 4-hour chart indicators are also unfolding in short positions, signaling a possible upward correction completion.
The AUD/USD rebounded from the resistance level 0.7385 (EMA50 daily chart). In case of breakdown of support levels 0.7345 (EMA200 on 4-hour chart), 0.7320 (EMA144) reduction pair AUD/USD accelerated. The pair remains within the descending channel on the daily chart. The lower boundary of the descending channel on the weekly and daily charts is below the levels of 0.7160 (low of December), 0.7140 (low of May 2016).
Alternative scenario implies consolidation above the level of 0.7345, the breakdown level of 0.7385 (EMA50 daily chart) and an increase to the levels of 0.7445 (Fibonacci level of 23.6% correction to the wave of decrease in pair in July 2014), 0.7460 (EMA200 on the daily chart). A more aggressive growth of the pair to levels of 0.7700, 0.7775, 0.7820 (38.2% Fibonacci level and the April highs) remains uncertain.
Against the background of a strong US dollar negative dynamics of the pair AUD/USD maintained. Short positions still look preferably.
Support levels: 0.7345, 0.7320, 0.7260, 0.7200, 0.7160, 0.7140, 0.7100
Resistance levels: 0.7385, 0.7445, 0.7460
