AUD/USD fails to extend its gains despite good economic indicators and strong momentum. A new resistance line has been formed, and might be tested later this week.
Last week, the Aussie settled above the 0.70 line. There was no technical resistance there – just psychological. After a short struggle, AUD/USD traded nicely above this line, reaching a high of 0.7093.
But this didn’t hold. Renewed dollar strength took its toll on the Australian dollar as well. Near the end of the week, AUD/USD fell under 0.70 and closed the week at 0.6993.
The new forex week started with a positive indicator for the Aussie: HIA New Home Sales showed a neat rise of 3.9%. Australian Housing is very healthy, contrary to other countries in the world. Note that also the previous month’s figure, was revised upwards – from a rise of 8.3% to a rise of 8.6%.
All this didn’t seem to help the AUD/USD, as it plunged below 0.69, currently trading at 0.6880. The greenback is getting stronger all over the world, and the Aussie is no exception.
Looking at the graphs, we can see a new downtrend resistance line emerging. It begins on a high point at the beginning of the year, when the Aussie peaked at 0.7265. It is formed in last week’s high of 0.7093. After being formed by two points, will this line be tested again soon?
This forex week can turn out to be quite wild, with lots of economic indicators, and with the G20 summit. If the US dollar weakens, this downtrend resistance is serious. If the greenback strengthens, the AUD/USD has plenty of room to trade lower. The previous resistance line, that AUD/USD broke, now serves as a support line.
I’ll be following this interesting and rather stable currency pair.