AUDUSD on the Edge: Uptrend Faces Potential Reversal Amid Mixed Signals

The AUDUSD has shown upward momentum since early August but faces a potential correction indicated by bearish technical signals like a candlestick reversal pattern and negative divergence in RSI. Key resistance and support levels guide potential market movements, balancing between continued bullish trends and possible correction. The fundamentals reflect disappointment in Australia’s sluggish 0.2% GDP growth for the June quarter, driven by weak household consumption and falling mining profits, offset by government spending and positive trade contributions.

High Impact Economic Events

Wednesday 04:30 am (GMT+3) – Australia: GDP q/q (AUD)

Wednesday 16:45 (GMT+3) – Canada: Overnight Rate (CAD)

Wednesday 17:00 (GMT+3) – USA: JOLTS Job Openings (USD)

Thursday 15:15 (GMT+3) – USA: ADP Nonfarm Employment Change (USD)

Thursday 15:30 (GMT+3) – USA: Unemployment Claims (USD)

Thursday 17:00 (GMT+3) – USA: ISM Services PMI (USD)

Thursday 17:00 (GMT+3) – USA: EIA Crude Oil Stocks Change (USD)

Friday 15:30 (GMT+3) – Canada: Employment Change (CAD)

Friday 15:30 (GMT+3) – USA: Nonfarm Payrolls (USD)

Friday 17:00 (GMT+3): Canada: Ivey PMI (CAD)

The AUDUSD has been on an upward trend since August 5, when it reached a low price of 0.63474. Since then, the exchange rate between the Australian and the US Dollar has peaked at 0.68228, marking the highest price of 2024. However, a recent Tower Top Japanese candlestick reversal pattern suggests a potential downward correction. The 20-period Exponential Moving Average (EMA) supports the bearish outlook for the AUDUSD. On the other hand, the 50-period EMA, the Momentum oscillator, and the Relative Strength Index (RSI) indicate a continuation of the uptrend. Specifically, the Momentum oscillator and the RSI have values above the 100 and 50 baselines, respectively. Additionally, prices are above the 50-period EMA. A closer look at the price chart reveals a negative divergence between the price and the RSI, indicating a potential downward correction.

Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:

0.68228: The initial price target is set at 0.68228, representing the highest exchange rate in 2024.

0.68511: The second price target is identified at 0.68511, corresponding to the weekly resistance (R2) calculated using the standard Pivot Points method.

0.68703: The third target is established at 0.68703, representing a weekly peak marked on December 24.

0.68793: An additional price target is determined at 0.68793, corresponding to the weekly resistance (R3) calculated using the standard Pivot Points method.

Should the sellers take market control, traders may consider the four potential support levels listed below:

0.66959: The first line of support is seen at 0.66959, reflecting the daily high marked on August 22, coinciding with the 23.6% Fibonacci Retracement between the low point of 0.63474 and the high point of 0.68228.

0.66418: The second support level is 0.66418, representing the peak formed on August 14 and the 38.2% Fibonacci Retracement between the low point of 0.63474 and the high point of 0.68228.

0.65870: The third support line is established at 0.65870, aligning with the 50% retracement between the swing low at 0.63474 and the swing high at 0.68228.

0.65261: An additional downward target is observed at 0.65261, corresponding to the 61.8% Fibonacci Retracement between the low point of 0.63474 and the high point of 0.68228.

According to the Australian Bureau of Statistics (ABS), in the June 2024 quarter, the Australian economy grew by 0.2%, marking the eleventh consecutive quarter of expansion, with GDP increasing by 1.5% for the 2023-24 financial year. This was the weakest annual growth since 1991-92, outside the COVID-19 pandemic period. Household consumption declined by 0.2%, driven by reduced discretionary spending, while government expenditure increased, contributing positively to GDP. The household saving-to-income ratio remained low at 0.6%. Mining profits dropped due to lower global demand, and compensation for employees rose by 0.9%. Net trade and government consumption were key contributors to growth, while the terms of trade fell 3%.

In summary, the AUD/USD is currently showing signs of both fundamental and technical weaknesses despite the uptrend that began in early August. Australia’s economy only grew by 0.2% in the June 2024 quarter, mainly due to weak household spending and a decrease in mining profits. However, government spending and trade have provided some positive momentum. Major economic reports are scheduled for release this week, including the Nonfarm Payrolls, which could impact global markets. Additionally, technical indicators are signaling a possible upcoming downward correction. It is important for traders to remain updated on the latest geopolitical, technical, and economic developments in order to closely monitor market trends and make well-informed trading decisions.