On Tuesday, the Australian Dollar continued rising against the USD. The reason is not only the weakness of the American currency in anticipation of another US Federal Reserve meeting, but the statistics published by Australia this morning as well.
The Building Approvals in Australia expanded by 6.4% m/m in June, which is much better than both previous and expected readings (-2.5% m/m and +1.1% m/m respectively). The report is very positive for the Australian economy and provides significant support to the Aussie.
Apart from this, China reported on the Manufacturing PMI and the Non-Manufacturing PMI in July today. The first indicator decreased up to 51.2 points after being 51.5 the month before, the second one – from 55.0 points to 54.0 points. It’s quite surprising, but these numbers didn’t make the Aussie retreat, although the Australian currency is usually very sensitive to the Chinese news and statistics.
Investors are waiting for the July meeting of the US Federal Reserve, that’s why the American currency is getting weaker. Not all of them truly believe that the US economy is strong enough to allow the regulator to increase the benchmark rate four times this year instead of three. The Federal Reserve still hasn’t informed investors about this. The Aussie may try to recover as long as the USD is under pressure.
From the technical point of view, the downtrend is still dominating. Such conclusion may be drawn because the price is still moving inside the long-term descending channel. At the same time, one should note that the mid-term movement is sideways. Still, the Flat pattern doesn’t necessarily mean a reverse or a continuation of the current tendency.
The short-term tendency may be described as an uptrend, which is moving not only towards the resistance line of the short term channel, but mid- and long-term ones as well. As a result, it may be assumed that the short-term upside target is at 0.7495. If the pair breaks this level, the long-term tendency may change. However, if the price breaks the local support line at 0.7395, the instrument may continue falling to reach 0.7325.
By: Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Disclaimer: Any forecasts contained herein are based on the authors' particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.