Home Forex Market Analysis Forex Signals AUD/USD Violates Upward Channel – Selling Setup Looms 

AUD/USD Violates Upward Channel – Selling Setup Looms 

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The AUD/USD closed at 0.77647 after placing a high of 0.77819 and a low of 0.77387. AUD/USD pair rose for the third consecutive session on Thursday amid the rising risk-sentiment in the market and the broad-based US dollar weakness. The US dollar was weak on Thursday due to increased hopes for a large stimulus package worth $1.9 trillion from the US’s new Democratic government. Joe Biden, who took office on Wednesday, signed many executive orders to help the US economy cope with the coronavirus pandemic crisis.

The smooth transition supported the risk sentiment at the White House, and it supported the risk-sensitive currency Aussie that ultimately added in the upward momentum of the AUD/USD pair. On the other hand, the US dollar index that measures the value of the US dollar against the basket of six currencies fell by 0.2% to 90.04 level and weighed on the greenback that ultimately added in the gains of AUD/USD pair.

Meanwhile, at 05:00 GMT, the MI Inflation Expectations for December came in as 3.4% against November’s 3.5% on the data front. At 05:30 GMT, the Employment Change from Australia remained flat at 50.0K. The Unemployment Rate from Australia for December dropped to 6.6% against the forecasted 6.7% and supported the Australian Dollar that added further gains in AUD/USD pair. 

From the US side, at 18:30 GMT, the Philly Fed Manufacturing Index for January improved to 26.5 against the predicted 11.2 and supported the US dollar that capped further upside in AUD/USD pair. The Unemployment Claims from last week were reduced to 900K from the predicted 930K and supported the US dollar. For December, the Building Permits improved to 1.71M against the predicted 1.60M and supported the US dollar. The Housing Starts from December also improved to 1.67M against the predicted 1.56M and supported the US dollar that limited the AUD/USD pair’s gains. 

Despite the strong macroeconomic data and less than expected unemployment claims from the US, the AUD/USD pair continued posting gains on Thursday as investors’ focus remained over the rising hopes for further stimulus measures from the US government and the US dollar’s weakness.

The AUD/USD pair was also rising because of the expansion in China’s GDP in the fourth quarter of 2020 by 6.5%. It made the country one of the few in the world to register positive growth for the year and supported the China-proxy Aussie that ultimately added gains in AUD/USD pair.


Daily Technical Levels

Support Resistance

0.7716 0.7780

0.7677 0.7803

0.7653 0.7843

Pivot Point: 0.7740

The AUD/USD pair has violated the support level of 0.7724 level, and it’s holding below the same resistance level right now. On the lower side, the AUD/USD may extend the selling trend until the 0.7696 level. The recent bearish engulfing candles are supporting selling bias in the AUD/USD pair. We should consider taking a selling trade below 0.7724 level today. Good luck! 

 

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