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The top growth leaders: review from 04/20/2021

Having received support last week from positive data from the Australian labor market, the AUD strengthened significantly, while the AUD / USD pair rose.

As the Australian Bureau of Statistics reported on Thursday, the number of jobs in March rose by 70,700, while unemployment fell to 5.6% from 5.8% in February (the forecast was 35,000 and 5.7%, respectively). Thus, unemployment in Australia fell to the lowest level since March 2020, and the employment rate was 0.5% above the dock level.

The Australian dollar also started this week on a positive note, remaining one of the growth leaders amid growing investor interest in risk. The AUD / USD pair is trading at the beginning of today’s European session near 0.7800, 0.7815 the highest since March 19, maintaining the bullish momentum.

As follows from the minutes of the April meeting of the RBA on monetary policy, published at the beginning of today’s Asian session, the central bank leaders tend to adhere to the parameters of the current policy. “As suggested by preliminary data, GDP for the 1st quarter probably recovered to the area of ​​dock-like levels – faster than previously expected,” I must say, employment returned to pre-crisis levels “much faster than forecast,” the RBA minutes say. … At the same time, the bank’s management “will continue to take appropriate measures to support the Australian economy”, “until the targets for inflation and employment are achieved.” The key rate will remain at the level of 0.1% “as needed”, and “the Central Bank will not raise the rate until the actual inflation is stable in the target range of 2% -3%.”

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According to a recent Reuters poll, economists expect Australia’s economy to grow at its fastest pace since 2007 amid a successful fight against COVID-19. It is expected to grow by 4.4% in 2021 and by 3.2% in 2022, which is higher than previous estimates of 3.0% –3.5%. Some economists expect more significant growth in the Australian economy (+ 4.7% in 2021 and + 3.7% in 2022).

AUD remains positive, strengthening against the USD and other major currencies.

Meanwhile, the US dollar continued to decline during today’s Asian session. The DXY dollar index at the time of publication of this article is near the level of 90.94, 60 points below the closing price of last Friday, 10 points below the opening price of today’s trading day.

It seems that market participants are increasingly focusing on improving the outlook for the global economy, rather than on the outstripping growth of the US economy. Nevertheless, it cannot be ruled out that the dollar is in the stage of correction after strengthening since the beginning of the year. As soon as the yield of US government bonds starts to grow steadily again, the dollar will also begin to strengthen again, receiving support from the growing yields of US bonds.

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A correction in the American stock market, which has grown significantly recently amid investor optimism and their propensity to buy risky and highly profitable assets, can also provoke a strengthening of the dollar.

Today, the publication of important macro statistics for the US and Australia is not expected. It will appear at the start of the Asian session tomorrow, when the Australian Bureau of Statistics releases retail sales data (at 01:30 GMT). The retail sales index is considered an indicator of consumer confidence and reflects the state of the retail sector in the near term. A rise in the index is usually positive for the AUD; a decrease in the indicator will negatively affect the AUD. If the data turns out to be weaker than the previous value, then the AUD may sharply decline in the short term; above the previous values, then the AUD is likely to strengthen. Forecast: + 1.0% in March (against -0.8% in February).

Technical analysis and trading recommendations

Yesterday the AUD / USD pair broke through the important resistance level 0.7750 (the upper border of the descending channel on the daily AUD / USD chart), and today it is developing an upward trend, heading towards the important resistance level 0.7850 (ЕМА200 on the monthly chart).

At the beginning of today’s European session, the pair is attempting to rise to the zone above the psychologically significant level of 0.7800.

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The indicators OsMA and Stochastic on the 4-hour, daily, weekly charts are on the buyer’s side.

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The breakdown of the 0.7800 resistance level will confirm the prevalence of the AUD / USD upward trend with the prospect of its growth to the 0.7980 resistance levels (61.8% Fibonacci retracement to the wave of the pair’s decline from 0.9500 in July 2014 to 2020 lows near 0.5510), 0.8160 (upper the border of the ascending channel on the weekly chart).

In an alternative scenario, the decline in AUD / USD will resume inside the descending channel on the daily chart and to support levels of 0.7540 (ЕМА144 on the daily chart), 0.7510 (Fibonacci level 50%), 0.7440 (ЕМА200 on the daily chart).

The first signal for the implementation of this scenario will be a breakdown of the short-term support level of 0.7760 (ЕМА200 on the 15-minute chart).

A breakdown of the support level of 0.7300 (ЕМА200 on the weekly chart) will finally return AUD / USD to a long-term downtrend.

Support levels: 0.7760, 0.7750, 0.7704, 0.7690, 0.7600, 0.7540, 0.7510, 0.7440, 0.7300.

Resistance levels: 0.7800, 0.7850, 0.7980, 0.8000, 0.8160.

Trade Recommendations:

Sell Stop 0.7740. Stop-Loss 0.7820. Take-Profit 0.7704, 0.7690, 0.7600, 0.7540, 0.7510, 0.7440, 0.7300.

Buy Stop 0.7820. Stop-Loss 0.7740. Take-Profit 0.7850, 0.7980, 0.8000, 0.8160.

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