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The Australian Dollar Retreats From Record Highs

2/3/2023 10:52 AM

The AUD/USD pair shows a moderate decline, testing 0.7050 for a breakdown and building on the "bearish" momentum that was formed the day before, when the instrument retreated from its June record highs. The reason for the appearance of downward dynamics was the growth of the US currency in almost the entire spectrum of the market, which intensified after the publication of the minutes of the meetings of the European Central Bank (ECB) and the Bank of England. Both regulators decided to raise interest rates by 50 basis points, and also announced their readiness to maintain a "hawkish" monetary policy until inflation reaches the target level of 2.0%.

In addition, the US dollar was supported by statistics on jobless claims: the number of Initial Jobless Claims for the week ended January 27 decreased from 186.0 thousand to 183.0 thousand, while analysts expected 200.0 thousand, and Continuing Jobless Claims for the week ended January 20 decreased from 1.666 million to 1.655 million, which also turned out to be better than forecasts at the level of 1.677 million.

Some support for quotes at the end of the week is provided by macroeconomic statistics from Australia and China. Australian Services PMI from the Commonwealth Bank in January rose from 48.3 points to 48.6 points with a neutral forecast. In addition, December data on Building Permits were presented yesterday: the total volume increased by 18.5% against preliminary estimates of 1.0%, and for private houses it was adjusted for the fourth time in a row, losing 2.3%. In general, the construction market remains under pressure from high inflation and the interest rate of the Reserve Bank of Australia (RBA). In turn, the Chinese Caixin Services PMI over the same period accelerated from 48.0 points to 52.9 points, while the forecast was at 47.3 points.

Bollinger Bands in D1 chart show active growth. The price range is narrowing, reflecting appearance of multi-directional dynamics in the short term. MACD is falling, keeping a relatively strong sell signal (the histogram is below the signal line). Stochastic, having reacted to the emergence of "bearish" dynamics, has only reversed into a horizontal plane, indicating a fragile balance of power.

Resistance levels: 0.7100, 0.7150, 0.7202, 0.7250. | Support levels: 0.7050, 0.7000, 0.6950, 0.6900.

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