AUD/USD Forecast May 20-24 – Aussie plummets as trade tensions escalates

May 19,2019 08:26   Source:Forex Crunch
AUD/USD posted huge losses last week, falling 1.9%. There are only three events in the upcoming week. Here is an outlook for the highlights of this week and an updated technical analysis for AUD/USD.

Australian employment numbers were mixed last week. The economy created 28.4 thousand jobs in April, marking a 3-month high and crushing the estimate of 15.2 thousand. However, the unemployment rate climbed to 5.2%, higher than the estimate of 5.0%. This is the highest level since August. The Westpac Consumer Sentiment slowed to 0.6%, while the wage price index remained pegged at 0.5%.

Trade tensions between the U.S. and China rose sharply last week. The U.S. and China exchanged tariffs on each other products, dampening hopes for a trade deal and weighing on risk appetite. Nervous investors have been dumping equities in favor of safe-haven assets, such as the U.S. dollar and the Japanese yen. On Friday, the U.S. raised tariffs on $200 billion in Chinese goods, from 10% to 25%. The move was announced a week ago, triggering sharp declines in the equity markets. The Chinese response was vigorous, as China retaliated with tariffs on $60 billion of U.S products. Although the U.S.and China are scheduled to continue trade talks, investors are wary after the latest tariff battle.

AUD/USD daily graph with support and resistance lines on it. Click to enlarge:

https://www.tradingview.com/x/9ROF3u2I/

  1. RBA Monetary Policy Minutes: Tuesday, 1:30. The minutes will provide details about the RBA meeting earlier this month, when the RBA maintained rates at 1.50%. The markets had expected a 25-point basis cut to reflect weakness in the Australian economy.
  2. CB Leading Index: Tuesday, 14:30. The Conference Board index is based on 7 economic indicators. The index posted a gain of 0.5% in March. Will we see an improvement in the April release?
  3. Construction Work Done: Wednesday, 1:30. The indicator is pointing to weakness in the construction sector, posting declines for two successive quarters. The estimate for Q1 is a small gain of 0.1%.

*All times are GMT

AUD/USD Technical Analysis

Technical lines from top to bottom:

With AUD/USD posting sharp losses, we start at lower levels:

0.7240 separated ranges in September and in October.

0.7190 is next.

Close by, 0.7165 (mentioned last week) was a swing low after a recovery in mid-November.

0.7085 was a low point in September.

0.6988 marked the low point in April. It remained relevant throughout the week.

0.6825 supported the pair in late 2016 and early 2017.

0.6744 was a low point in January.

0.6686 was an important cap back in January 2000.

0.6547 was an important resistance line back in December 2008.

I remain bearish on AUD/USD

With the U.S-China trade war heating up, the Aussie was steamrolled as risk appetite evaporated. The slide could continue as U.S. and Chinese tariffs are set to take effect shortly.

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The post AUD/USD Forecast May 20-24 – Aussie plummets as trade tensions escalates appeared first on Forex Crunch.



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