. Trading AUD/USD: Navigating Retail Sales Data - Capital Street FX

Trading AUD/USD: Navigating Retail Sales Data – Capital Street FX

Trading AUD/USD: Navigating Retail Sales Data – Capital Street FX

08 Jan 2024

The Australian Dollar remains just above a key psychological level in anticipation of Australian Retail Sales data.

FUNDAMENTAL OVERVIEW:

  • The Australian Dollar weakens amid the ongoing strength of the US Dollar.
  • Forecasts suggest a 1.2% growth in Australian Retail Sales, a rebound from the previous 0.2% decline.
  •  US Nonfarm Payrolls have surged to 216K, up from the previous 173K.

On Monday, the Australian Dollar (AUD) exhibits a decline relative to the US Dollar (USD). The AUD/USD pair encountered volatility on Friday, driven by conflicting economic data from the United States (US). Despite a strong US employment report, apprehensions persist regarding diminished business activity in the services sector, leading investors to approach the economic outlook cautiously.

Scheduled for Tuesday, Australia’s forthcoming Retail Sales (MoM) data for November is anticipated to indicate a 1.2% rise compared to October’s 0.2% decrease. This could potentially influence Reserve Bank of Australia (RBA) policymakers to uphold heightened interest rates for an extended duration. However, the latest Judo Bank Purchasing Managers Index (PMI) data has disclosed a contraction in business activities within both the services and manufacturing sectors, potentially accentuating the susceptibility of the Australian Dollar.

The US Dollar Index (DXY) exhibits a lateral movement with a pessimistic inclination, potentially impacted by the drop in the short-term yield on the 2-year US Treasury bond. On Friday, the US Dollar experienced oscillations between gains and losses, a pattern attributed to mixed US data.

AUD/USD TECHNICAL ANALYSIS DAILY CHART:

Technical Overview:

AUD/USD is currently trading within an up channel.

AUD/USD is positioned below all the Moving Averages (SMA).

The Relative Strength Index (RSI) is in the selling zone, while the Stochastic oscillator suggests a Negative trend.

Immediate Resistance level: 0.6742

Immediate support level: 0.6687

HOW TO TRADE AUD/USD

After a notable ascent, AUD/USD encountered resistance, leading to a decline and subsequent trading within a downward channel. Presently, AUD/USD is approaching a significant support area; a breach of this zone may indicate further downward movement.

TRADE SUGGESTION- STOP SELL– 0.6675, TAKE PROFIT AT- 0.6576, SL AT- 0.6747.