MO AUDUSD 11.05.18
37715
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MO AUDUSD 11.05.18

Long Term Overview:

Economic Analysis

The Recent RBA Interest Rate Decision turn out to be more dovish than expected primarily because of external demand issues for Australian exports and a weakening domestic environment. As a result, the AUD is forecast to see further negative sentiment.

 

The United States and Canadian government have forged a new trade agreement to replace NAFTA, preserving President Trump’s ability to impose a 25 percent global tariffs on auto parts from Canada and Mexico – The USMCA trade deal is set to strengthen the dollar in the mid – long term, as a result of a combination of lower market uncertainty and stabilisation of the continents long standing trading relationships.

 

Strength in the Dollar is forecast to see a further growth after the Federal Reserve implied once again that FOMC Interest Rate policy is likely to remain relatively hawkish; preventing excessive inflation in a firming economic environment. Interest rate normalisation is expected to be in the region of 2.50% to 3.50% which may reinforce overall positivity in the greenback. From an Economic stand-point, Price may see a continued drop south in the AUDUSD in the Long term.

Long Term Analysis

The Bullish support level in the AUDUSD was broken early in 2015, where since then it has acted a resistance level above price. A Deadcross presented itself at the beginning of 2018 – now forming a large amount of resitance above price. Bias is short on all monthtly charts presented and with the further strength forecast for the USD. Should current conditions persist, price may reach previous lows nearing the 0.6450 area in the next couple of months.

 

Decision Point: Break and close below previous lows nearing the 0.7140 area

Long Term Trend: Short

Channel Range: N/A

Possible Bias: Short

Medium Term Analysis

Area of interest has been generated on the Weekly due to the current pullback into the Weekly 21EMA area. Overall bias is short on all weekly timeframes, including the monthly and is in a descending bearish channel on the weekly. Looking to the Monthly chart, price has been in a relatively slow and stable bearish trend, flicking between bearish candlesticks and bullish doji candlesticks, for the past 6 months. The second previous monthly candlestick was a bullish doji, indicating that after this indecision, price may move further south. Additionally, with the recent strength in the USD, this market may see a further push to the short side to previous lows nearing the 0.6841 area in the near term.

 

Decision Point: Push and close below previous lows nearing the 0.7200 area

Long Term Trend: Short

Channel Range: Descending: 285 pips

Possible Bias: Short