Hello everyone!
I will start this review with the results of last week, which were again disappointing for the AUD/USD currency pair. The Australian dollar has been declining against its American namesake for four weeks in a row. Moreover, the current week also started with the downward dynamics of the AUD/USD pair. However, the main and most important events are yet to come.
Let me remind you that today at 20:00 (London time), the US Federal Reserve (FRS) will announce its decision on the refinancing rate, which, as experts expect, will remain at the same level of 1.75%. Thus, the main attention of market participants will be focused on the accompanying statement of the Open Market Committee and the press conference of Fed Chairman Jerome Powell, which will begin at 20:30 (London time).
Also, data on initial applications for unemployment benefits, GDP and other macroeconomic statistics will be coming from the United States this week. All the details - date, time, forecasts - according to the listed and other statistics can be seen in the economic calendar.
Tellingly, several significant macroeconomic reports are also planned for Australia this week. So, today at 01:30 (London time), a block of data on the consumer price index was published, which, to the surprise of many market participants, turned out to be better than the forecast values. However, positive reports on consumer prices in Australia did not support the national currency of this country too much, and at the time of writing this article, the AUD/USD pair is under selling pressure, although insignificant.
An interesting fact is that some large investment houses are predicting the strengthening of "Aussie" to 0.72 and even 0.76. Of course, until then, much may change and market trends may change, the Reserve Bank of Australia (RBA) is set for a soft monetary policy, which is likely to continue. Also, large-scale forest fires in Australia will not help improve economic growth in the country, rather the opposite. This factor, of course, will not contribute to the strengthening of the Australian dollar. At least in the short term. In general, many market participants expect the RBA to lower its main interest rate around the middle of this year. Perhaps the only thing that can support the Australian dollar is the signing of the so-called "first phase" of the trade deal between Washington and Beijing. But, in principle, the market is ready for this, the event is expected (and, for a long time), so I think this factor will not affect the strengthening of the "Aussie" much. Course adjustments are possible.
Based on the above, the main trading idea for the AUD/USD pair is sales after corrective pullbacks to strong technical levels and price zones. So let's look at the AUD/USD charts for optimal and technically sound options for opening short positions.
Weekly
As noted above, this is the fifth consecutive week of declines in the Australian dollar. This cannot continue forever. But it is not yet clear when and where to expect a correction on the weekly TF. There are no signals for this at the moment.
If following the results of the two-day FOMC meeting and Powell's press conference, the US dollar falls under selling pressure and this week's candle is formed in the form of a reversal model, then we can count on a corrective growth of the pair. In the case of a positive reaction of market participants to the Fed, the US currency will strengthen across the entire spectrum of the currency market. In this scenario, the downward dynamics of AUD/USD will not only continue but will become even stronger.
At the end of the review, the AUD/USD pair breaks through strong and significant support at 0.6755. If the current week closes below this mark, the chances of a subsequent decline in the quote will increase even more.
Daily
But on the daily chart yesterday, there was a reversal candle "hammer" with a bullish body. However, it is worth noting that this reversal candle signal is against the main downward trend, so it can be ignored by the market and broken, which is signaled by the closing of today's trading below yesterday's lows of 0.6738.
However, as long as the signal is relevant and not broken, anyone can try buying a pair with the nearest target near 0.6825, where the Tenkan lines and the lower border of the Ichimoku cloud are located. Here I recommend turning over and considering opening short positions.
That's all for now. In anticipation of the most important events that will begin today at 20:00 (London time), I consider the abundance of trade recommendations inappropriate.
Good luck!