AUD/USD Forecast June 24-28

The Australian dollar dropped sharply last week, losing over 300 points against the surging US dollar. AUD/USD closed the week just above the 92 level, at 0.9212. This week’s sole release is Private Sector Credit. Here is an outlook of the events and an updated technical analysis for AUD/USD.

Australian number were respectable last week, as New Motor Vehicles Sales and the CB Leading Index posted better numbers than the previous month. However, the Aussie took it on the chin as the US dollar was broadly stronger, following  remarks from the Federal Reserve that it plans to taper QE later this year.

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

1. Private Sector Credit: Friday, 1:30. This indicator measures the change in the amount of credit issued to businesses and consumers. An increase in borrowing signals more spending in the private sector, which is critical for economic growth. The indicator has been quite steady, and rose 0.3% in the previous release, which matched the forecast. No significant change is expected in the upcoming release.

Live Chart of AUD/USD:

AUD/USD Technical Analysis

AUD/USD was sharply lower last week. The pair opened at 0.9565 and quickly touched a high of 0.9641. The pair then slid all the way to 0.9163, before closing the week at 0.9212, as support at 0.9171 (discussed last week) remained intact.

Technical lines from top to bottom:   

With the sharp losses by AUD/USD, last week saw multi-year support levels give way. We start with strong resistance at 1.0183. This line last saw action in early May. The next line of resistance is at 1.0093. This is followed by the parity line, which AUD/USD broke through in mid-May, as it continues to push to lower levels.

The next resistance line is at 0.9913. This is followed by 0.9797, which was last tested in mid-May. The next resistance line is at 0.9634. This line has strengthened as the pair trades at lower levels.

0.9549 has reverted to a resistance role. Next is 0.9428, which has been busy in June. Prior to this month, this line had provided strong support, and had not been breached since October 2011. The line of 0.9275 also gave way, as the pair broke below it for the first time since September 2010.

This is followed by support at 0.9171. Next, there is support at 0.9041, protecting the all-important 90 level.

0.8893 was last breached in August 2010, as the Australian dollar put together a strong rally which saw it climb above the 1.10 line. The final line for now is 0.8747, which has remained in place since July 2010.

I continue to be bearish on AUD/USD.

The Aussie is in a bad slump, and we could see nervous investors dump there Australian dollars and seek the safety of the US dollar. The greenback is broadly strong courtesy of the US Federal Reserve, and the fallout from the QE announcement could continue into next week.

The Aussie sometimes moves in tandem with gold. You can trade binary options on gold using this technical analysis.