Markets are off to a relatively quiet trading start to the historically low-volatility week between Christmas and New Year’s. As of writing, European equities are trading down slightly (with the exception of the UK’s FTSE 100 index, which is holding on to negligible gains), the dollar is essentially flat and major commodities including gold and oil are falling once again.
Against this backdrop, the AUD/USD’s flat start to the week is relatively impressive. The Aussie traded higher every single day last week after finding support at its rising bullish trend line, keeping the cautiously optimistic outlook for 2016 in play. Meanwhile, both the MACD and RSI indicators remain in bullish territory, bolstering the case for further gains as we flip our calendars to 2016.
Not surprisingly, there are few major economic data releases scheduled but there are a few reports to keep an eye on. Out of the US, traders will look forward to tomorrow’s Consumer Confidence report, which will cover the critical holiday shopping period, along with Wednesday’s November Pending Home Sales report and Thursday’s release of initial unemployment claims and Chicago PMI. While the economic calendar is completely barren Down Under, Thursday’s PMI reports out of China will shed some light on how Australia’s largest trading partner is doing and could therefore have a notable impact on AUD/USD.
Amidst the current low liquidity conditions, the next 100 pip move in AUD/USD will be difficult to judge, but the medium-term bias will remain in favor of the bulls as long as rising trend line support around .7120 holds. Therefore, bulls may look to fade a near-term dip if seen, with the potential for an eventual move up to key previous resistance and the 200-day MA, in the .7380-.7400 range.
Source: FOREX.com