AUDUSD
The AUDUSD pair continues its march higher. Following the Fed’s decision to target average inflation, the pair made a new leg higher last Friday.
It closed at the highs, well above the 0.73 mark, making it one of the best performers in the G10 currencies in 2020. It opened the year at 0.7 and now recovered above 0.73 despite trading as low as 0.55 at the start of the coronavirus crisis.
This is a busy week for the Aussie traders, with economic data coming out of Australia and the United States. Moreover, the entire world is looking at Australia and how it deals with the coronavirus crisis because it is one of the first developed countries to deal with the virus during the winter. Hence, the Western world is taking notes and looks at numbers and what is the best approach for the months to come.
The AIG Manufacturing Index, the Building Approvals or the Current Account are just some of the pieces of economic data coming out before the main event for Aussie traders – the RBA’s interest rate decision.
The RBA sets the interest rate monthly. Every first Tuesday of the month (i.e., the NFP week) the RBA reviews its framework and sets the rate on the Australian Dollar. The AUDUSD pair is one of the pairs that reacts the most, but this time the driver responsible for its steep advance comes from the United States.
In other words, the AUDUSD is not expected to react significantly from a fundamental point of view because the RBA does not plan to announce anything new.
From a technical perspective, the AUDUSD looks interesting here. On the one hand, the move higher happened in a rising channel, above dynamic resistance that turned into support. On the other hand, the 0.7 is the 2020 opening level and is likely to be pivotal moving forward.
Technical traders note the 0.72 resistance on the way up, and that may act as a key level on a possible break lower. To trade it, place a pending sell-stop order at 0.72 targeting a sub-0.7 move and a stop-loss at 0.73 for a nice risk-reward ratio.
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