The AUD/USD price extended its drop as the Dollar Index accelerated its growth. The DXY reached new highs even if the US data disappointed earlier today.
Personally, I’ll wait for the Dollar Index to retreat before looking for new USD longs. DXY climbed as much as 103.28, where it found resistance.
The Aussie resumed its depreciation versus the greenback even if the Australian Consumer Price Index rose by 2.1% versus 1.7% expected compared to 1.3% growth in the previous reporting period. In addition, Trimmed Mean CPI registered a 1.4% growth versus 1.2% forecasts.
The USD resumed its appreciation despite some poor economic data reported yesterday. Durable Goods Orders, CB Consumer Confidence, and the New Home Sales came in worse than expected.
Today, Pending Home Sales dropped by 1.2%, more than 1.0% forecasts, Prelim Wholesale Inventories registered a 2.3% growth compared to 1.5% estimates. At the same time, Goods Trade Balance came in at -125.3B, far below -105.0B expected.
AUD/USD price technical analysis: Demand zone
(Click on image to enlarge)
After its massive drop, we cannot exclude a temporary rebound. As you can see on the 4-hour chart, the pair reached the 0.7105 key level and the descending pitchfork’s lower median line (LML), which represents dynamic support.
False breakdowns through these support levels or a bullish pattern could announce a potential bounce back. Conversely, registering a valid breakdown below 0.7105 may signal more declines ahead. But, of course, this scenario could take shape only if the Dollar Index resumes its growth.
The weekly S2 (0.7090) stands as a potential downside obstacle. Technically, the bias remains bearish. It could drop deeper anytime. Still, a potential throwback could help the sellers to catch a new sell-off. The AUD/USD pair reached downside obstacles.
That’s why I’ll wait to see how it will react before I take action. As long as we don’t have a bullish reversal pattern, it’s premature to look for longs.
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