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AUDUSD High Probability of a Trend Change Upwards

11/17/2022 11:23 AM

This week, the "bulls" are trying to break through the key resistance level of 0.6725 against the background of the weakening of the US dollar after the announcement of the results of the primary elections to the US Congress, as a result of which the Republican Party gained control of the lower House of parliament. Also, the latest published macroeconomic statistics were poor: in October, the producer price index MoM rose by only 0.2%, although analysts had expected a figure of 0.4%, while the underlying value showed zero dynamics, despite the growth forecast by 0.3%. The volume of industrial production decreased by 0.1% and reached 3.28% YoY, lower than the previous figure of 4.96%, revised downward from 5.33%.

The Reserve Bank of Australia (RBA), in the minutes of the last meeting on monetary policy, announced its readiness to continue a less active increase in interest rates while stressing that the size of the adjustment will depend on incoming macroeconomic data and forecasts for inflation and employment. In their preliminary estimates, officials noted a slowdown in consumer price growth in the country to the upper limit of the target range of 3.0% by December, but this figure was later revised up to 2025. Meanwhile, data from the Australian Bureau of Statistics showed an increase in the Wage Change Index, which measures the average cost of labor excluding bonuses, to 1.0% QoQ, the highest since 2012 compared to the previous period, while the average wage reached 3.1% from 2.6% earlier, which, however, is significantly lower than the growth in consumer prices by 7.3%. Economists believe that the statistics will not significantly impact the course of the RBA, which is expected to adhere to tightening monetary stimulus until at least early 2023. Markets are confident that in December, officials will again raise interest rates by 25.0 basis points, bringing it to 3.10%.

Thus, the AUD/USD pair has a chance of changing the long-term trend to an upward trend, but for this scenario to implement, it is necessary to reflect positive dynamics in macroeconomic statistics.

The long-term trend remains downwards. Market participants are testing the key resistance level 0.6725, and if it is held, a new downward impulse will follow, the target of which will be the support level 0.6500. After the consolidation above 0.6725, an upward movement is likely up to 0.6900.

The medium-term trend is upwards. This week, the traders broke through the target zone 2 (0.6727–0.6709), and the asset quotes went to the area of ​​0.6930–0.6910. The key trend support is shifting to 0.6597–0.6577, and if the price corrects into this area, then it is worth considering long positions with the target at the current week's high of 0.6795.

Resistance levels: 0.6725, 0.6900, 0.6990. | Support levels: 0.6500, 0.6290.

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