China, one of Australia’s largest trading partners, is dropping another set of economic data!
Not only that, but the FOMC gang will be all over our charts this week as a few members share their policy biases and maybe give clues on their next voting decisions.
Will this week’s events push AUD/USD from its range? Or will the pattern hold?
Before you check out the setup, make sure you know all of last week’s major market movers as well as this week’s potential market catalysts!
Last week was NOT a good week for AUD/USD, which got rejected at the .6800 major psychological level before dropping all the way to its current .6650 level.
The pair has also broken below the .6680 mid-range support zone, which opens up a move down to the .6580 range support area that held at least twice since March.
Let’s see if AUD bears have enough momentum to hit the previous support levels.China – one of Australia’s largest trading partners – is printing a bunch of top-tier economic indicators this week. Data misses relating to production and consumption could reignite concerns over the pace of post-COVID global economic recovery.
Meanwhile, a bunch of FOMC members are scheduled to give speeches. Judging by Bowman and Williams’ statements last week, Fed members are still pretty hawkish on keeping rates higher for longer, while markets are already pricing in a pause or an interest rate cut this year.
AUD/USD could drop by another 50 or so pips and actually hit the .6580 support area.
Before you sell AUD/USD like there’s no tomorrow, you should also note that Stochastic is already showing an “oversold” signal.
Until we see China’s numbers, or until we hear more hawkish FOMC statements, AUD/USD could pull back some of its losses and retest the mid-range zone.
AUD/USD could even retest .6750 without hitting the .6580 support!
For now, I’ll be looking for shorting opportunities until AUD/USD hits .6580. Then, I’ll be looking at China’s data dump and the first FOMC speakers to see if AUD/USD can have enough momentum for a downside breakout or if we can price in a range bounce.
What do you think?