AUDUSD traded lower in the last week. I was expecting the pair to drop lower especially after the weak employment data. The RBA rate statement on Tuesday also re-iterated that they are not comfortable with the higher exchange rates. The pair broke an important up-move trend line as plotted in the chart below. I think the pair may drop further in the upcoming week.
The pair may retrace some of the losses of the earlier week and can test the broken trend line again, which may act as a resistance in the short term. So, I think we should look forward to sell rallies around the levels such as 0.9430 and 0.9450. Any move higher along with a bearish hidden divergence on the 4 hour chart may present us a sell opportunity.
Initial target should be around the next major support of 0.9330 and final target could be around the gap close level of 0.9220 as shown in the chart below. Stop should be triggered after a 4 hour close above the broken trend line.
Major events scheduled in the upcoming week
Some major surprises came up in the last week. First was the rate cut from the ECB on Thursday. The European central bank in the last week’s meeting decided to cut the Euro zone key interest rate with 0.25%. This came like a surprise as the market was not expecting any rate cut, and as a result EURUSD fell more than 200 pips in a single day. Second was the Nonfarm payrolls data for the US. It was reported that total 204K jobs were created in October. The market was expecting a decline in the jobs due to the US shutdown. So, a rise again was surprising, which pushed the US dollar up against most of the major currencies on Friday.
Let us look at all major events lined up in the upcoming week.
Sunday – Australian Home loans.
Monday – Italian industrial production data and UK RICS House price balance data.
Tuesday – German inflation data, UK inflation data and US NFIB small business optimism.
Wednesday – UK employment data, Euro zone composite industrial production data, US federal budget balance and Japan’s GDP figure.
Thursday – French GDP, German GDP, Italian GDP, UK retail sales data, Euro zone composite GDP, US initial jobless claims and US trade balance data.
Friday – Euro zone inflation data, NY empire state manufacturing index and US industrial production data.
This analysis is taken from Weekly Market Forecast, which also includes trade opportunities on: EURUSD, EURGBP, NZDUSD, USDJPY, USDZAR, USDTRY, EURNOK, AUDCAD, INDICES, GOLD and OIL.
Get it HERE: Vladimir’s Markets Forecast
Enjoy weekend friends!
