AUD/USD Forecast Dec. 19-23

AUD/USD fell 240 points last week, as the pair closed at the 0.73 line. There are only four events this week. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The Fed raised rates a quarter point, only the second rate hike since the financial crisis in 2008. The Fed was hawkish in its rate statement and upgraded its hike forecast for 2017. This triggered a US dollar rally and the Australian currency dropped sharply. Elsewhere, US retail sales missed expectations, while US CPI came in at 0.2%, matching the forecast. Australian Employment Change sparkled with a gain of 39.1 thousand, well above expectations.

Updates

AUD/USD daily graph with support and resistance lines on it. Click to enlarge:

1. CB Leading Index: Monday, 13:30. The index is based on 7 economic indicators, but is a minor event, as most of the data has been previously released. The indicator improved to 0.5% in September, a five-month high.
2. RBA Monetary Policy Meeting Minutes: Tuesday, 00:30. The minutes provides details of the RBA’s last meeting in early December, when the bank held rates at 1.50%. Analysts will comb through the minutes, looking for hints as to future monetary policy.
3. RBA Mid-Year Economic and Fiscal Outlook: Tuesday, Tentative. This annual report compares the government’s fiscal program contained in the budget, which was released in May, with actual fiscal performance. An optimistic report is bullish for the Australian dollar.
4. Australian MI Leading Index: Tuesday, 23:30. This minor indicator has been steady, posting three gains of 0.1% in the past four releases. Will the index improve in the November report?

AUD/USD Technical Analysis

AUD/USD opened the week at 0.7447 and climbed to a high of 0.7525. The pair then reversed directions and dropped to a low of 0.7264, as support held firm at 0.7223 (discussed last week).

Live chart of AUD/USD:

AUDUSD chart by TradingView

Technical lines from top to bottom:

0.7737 was a cap in June 2015.

0.7626 is next.

0.7513 was a cushion in April 2015.

0.7427 has switched to a resistance line following sharp losses by AUD/USD.

0.7333 is an immediate resistance line. It was a cap in December 2015.

0.7223 held firm in support.

0.7148 is next.

0.7015 is protecting the symbolic 0.70 level.

0.6918 is the final support line for now.

I remain bearish on AUD/USD.