In an abbreviated Christmas week, the Australian dollar showed little net change. The lack of movement was in contrast to the sharp declines of the previous week, when the currency dived almost 2%. There are just two events this week. Here are the highlights of the week and an updated technical analysis for AUD/USD.

The Aussie has declined 3.8% in December, as market turmoil has dampened risk appetite and pushed the currency lower. The pair has plunged some 9.8% in 2018 and is in danger of breaking below the symbolic 0.70 line, which has held since February 2016. With the global trade war continuing, January could bring further headwinds for the Aussie, a commodity currency which is sensitive to geopolitical conditions.

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

1. Private Sector Credit: Sunday, 19:30. Borrowing levels continue to grow steadily, with gains of 0.4% in the past two months. An identical gain is expected in the November release.
2. Commodity Prices: Wednesday, 00:30. Commodity prices reflect the strength of the export sector. The indicator continues to strengthen and improved to 14.9% in December. Will the positive trend continue in January?

*All times are GMT

AUD/USD Technical Analysis

AUD/USD posted gains early in the week but the currency then retracted. With the pair showing limited movement last week, our technical analysis remains largely unchanged.

Technical lines from top to bottom:

0.7501 was a strong resistance line in the first quarter of 2018.

The round number of 0.74 was the high point reached at the wake of December. Next is 0.7340, which the pair breached in late November.

0.7315 was a swing high seen in late September and has strengthened in resistance as AUD/USD has lost ground in Q4.

Further down, 0.7240 separated ranges in September and in October. 0.7190 marked a low point in the first week of December.

Lower, 0.7165 was a swing low after a recovery in mid-November. 0.7085 (mentioned last week), was a low point in September. It is providing resistance above the round number of 0.70.

Close by is the support level of 0.6970, which played a role back in January 2017. Below, 0.6825 supported the pair in late 2016 and early 2017.

0.6775 is the next support level. Below, 0.6686 was an important cap back in January 2000.

0.6532 is the final support level for now.

I am bearish on AUD/USD

Following a dismal December, traders shouldn’t expect glad tidings for the Aussie. The rough ride could continue, as investor risk apprehension remains high after sharp volatility on global equity markets. The shutdown of the U.S government could further sour investor sentiment, making risk currencies like the Australian dollar less attractive.