The Australian dollar against the US currency was attacking the 70th figure for half a year: buyers of AUD/USD were able to approach the level of 0.7000 in early June, but numerous attempts to storm this price barrier ended in nothing. And only at the end of July, amid the general weakness of the dollar, the bulls won the long-awaited "trophy". After settling above the level of 0.7000, buyers went further, but here another obstacle appeared in the form of the 72nd figure. The AUD/USD bulls have been trying to enter this price area for a week already, but they retreat each time. Yesterday, the pair reached the resistance level of 0.7250 (the upper line of the Bollinger Bands indicator on the daily chart), but eventually ended the trading day at the 71st price level. However, taking advantage of the general weakness of the US currency, the buyers are not giving up. They are testing the "unresponsive" level again today.
It should be noted right away that the AUD/USD pair demonstrates such a strong growth solely due to the dollar's problems. In cross-pairs, the Australian currency behaves much more modestly (for example, paired with the Canadian dollar or the Norwegian krone). Traders even ignored the latest meeting of the Reserve Bank of Australia, focusing only on American events. Therefore, the future prospects of the "Aussie" must also be viewed exclusively through the prism of events in the United States. In addition to the spotlight are Chinese macroeconomic indicators, as despite political tensions, China remains Australia's largest trading partner. All other fundamental factors are now playing a secondary role.
Within the framework of this week, all the attention of traders of dollar pairs will be focused on Nonfarm. And the AUD/USD pair is no exception here: if the data on the growth of the US labor market are in the "red zone" tomorrow, the US dollar will continue its downward movement, while the Australian dollar will be able to try again at the 72nd figure. There are certain prerequisites for such a scenario: yesterday's report from the ADP agency came out much worse than forecasts (an increase of only 167 thousand instead of the projected growth of almost one and a half million jobs). If the July Nonfarms similarly disappoint traders, the dollar will swoop down throughout the market again.
It is also worth noting that the Reserve Bank of Australia will publish a quarterly report on monetary policy tomorrow. In this document, Central Bank economists analyze in detail the current economic conditions and forecasts - both for the Australian and global economies. Considering recent events (especially in the context of the spread of coronavirus in Australia), experts do not expect to see any optimistic notes in this report.
Let me remind you that at its last meeting, the Australian Central Bank did not ignore the situation in the state of Victoria. As Philip Lowe noted, the tightening of quarantine measures in this region will affect the recovery of the labor market, given the fact that this state has the largest container port in the country. At the same time, the regulator announced an uneven recovery in labor market indicators in June (an increase in part-time employment with a decrease in full-time employment). Based on the updated forecasts, the unemployment rate will rise to about 10% in the coming months. The RBA report published tomorrow can assess the prospects for the Australian economy in more detail, given the dynamics of macroeconomic indicators and the situation with COVID-19 in the country. If these estimates are too pessimistic, the AUD/USD pair may retreat from the won heights again.
However, the price pullback is likely to be temporary, as the Australian regulator has already expressed its position on the prospects for monetary policy at the August meeting. Philip Lowe made it clear that the Central Bank is ready to continue to maintain a wait-and-see attitude. Therefore, the overly pessimistic RBA report will allow traders to enter purchases at a better price, with a possible downward price pullback.
From a technical point of view, the priority also remains with the longs and on all "higher" time frames - H4, D1, W1 and MN. So, on the daily chart, the price is between the middle and upper lines of the Bollinger Bands indicator, and the Ichimoku indicator has formed a bullish "Parade of Lines" signal. The weekly chart also shows the priority of the upper scenario: the pair is in the same configuration relative to the Bollinger Bands indicator, and the price is above the Kumo cloud. The monthly chart suggests that the price is between the middle and upper lines of the Bollinger Bands indicator - that is, the subsequent growth may be of a larger scale. But the closest target of the upward movement is the price of 0.7250 – this is the upper line of the above BB indicator. If the Nonfarms come out worse than the forecast values tomorrow, the pair will test this resistance level without any difficulty.
