Current trend

Last week, buyers were unable to break through the key resistance level of 0.6500, as a result of which the AUD/USD pair continued to fall: the quotes lost their “bullish” advantage and retreated from the highs of September 1 in response to the publication of the results of the Reserve Bank of Australia (RBA) meeting.

Although the regulator kept the interest rate at 4.1% for the third month, officials did not rule out further tightening of monetary policy parameters, which will directly depend on incoming macroeconomic data. Inflation may slow while Australia’s economy is on “the narrow path” to avoiding recession, according to monetary authorities’ rhetoric. Earlier, Federal Treasurer Jim Chalmers highlighted economic uncertainty, including “painful pressure” on households, whose spending fell in July for the first time since February 2021, as well as concerns about the recovery of the Chinese economy, one of the country’s main trading partners. Chalmers acknowledged that higher interest rates harm the economy, negatively affecting the position of the national currency.

The American dollar strengthened after the publication of data on building permits for August: the figure was 6.9%, exceeding 0.1% earlier, which corresponds to 1.543M against the forecast of 1.440M and the previous value of 1.443M. Last week, US Federal Reserve officials left the interest rate at 5.50% but noted that the decline in borrowing costs will begin later than expected, resulting in the forecast for 2023 being at 5.50–5.75%, and 12 of the 19 members of the regulator predict another tightening of monetary policies this cycle.

Thus, under the influence of the ongoing monetary policies of the RBA and the US Federal Reserve, the AUD/USD pair is likely to continue to decline with the target at the minimum of October last year of 0.6195.

Support and resistance

The long-term trend is downward: last week, the trading instrument unsuccessfully tested the key resistance level of 0.6500, after which the decline continued, and now, the quotes are at 0.6417, preparing to continue moving towards 0.6380, after breaking which, the next target within the trend will be 0.6285.

The medium-term trend is downward, and within it, the price has reached zone 3 (0.6384–0.6367), which traders cannot overcome for six weeks. If this area is kept, a correction with the target in the trend resistance area of 0.6544–0.6527 will begin, after reaching which short positions with the target at the September low of 0.6360 are relevant.

Resistance levels: 0.6500, 0.6610.

Support levels: 0.6380, 0.6285.

Trading tips

Short positions may be opened below 0.6380 with the target at 0.6285 and stop loss around 0.6411. Implementation time: 9–12 days.

Long positions may be opened above 0.6500 with the target at 0.6610 and stop loss around 0.6460.