Last week, the AUD/USD pair tried to recover the positions lost after releasing strong December statistics from the US labor market, testing the middle line of Bollinger bands around 0.7000 but has not been able to break above it yet.
Australian group National Australia Bank Ltd. (NAB) released today's January business confidence data, which was strong but failed to support the positions of the national currency significantly: the index of current business conditions increased from 13.0 points to 18.0 points, and the index of confidence in the prospects – from –1.0 points to 6.0 points. Also, the sales index rose from 20.0 points to 28.0 points. The positive dynamics confirm that the economy remains sufficiently resilient to the current rate hike by the Reserve Bank of Australia (RBA), allowing officials to continue their hawkish course at the next meeting.
Nevertheless, investors are in no hurry to open new trade deals in anticipation of the main event of the week – the publication of January data on US consumer inflation since further actions of the US Federal Reserve will largely depend on them. Experts believe that price growth in the country will slow down from 6.4% to 6.2% YoY, and the core rate will be adjusted from 5.7% to 5.5%. However, if the value is higher than forecasts or December statistics, this will signal a poor impact on the economy of the already implemented tightening of monetary stimulus, forcing the regulator to move to more aggressive rhetoric. In this case, the pressure on assets alternative to the US dollar may seriously increase.
The trading instrument continues its upward correction toward the long-term downtrend. The key "bullish" seems to be 0.7000 (the middle line of Bollinger bands). If it is broken upwards, the growth can continue to 0.7080 (Murrey level [6/8]) and 0.7200 (Murrey level [7/8]). If it drops to 0.6835 (Murrey level [4/8]), supported by the lower line of Bollinger bands, the downward movement can be continued to the area of 0.6713 (Murrey level [3/8], Fibonacci retracement 38.2%) and 0.6591 (Murrey level [2/8]).
Technical indicators do not give a single signal: Bollinger bands are horizontal, the MACD histogram is decreasing in the positive zone, and Stochastic is pointing upwards.
Resistance levels: 0.7000, 0.7080, 0.7200. | Support levels: 0.6835, 0.6713, 0.6591.