There has been a sharp fall in the AUD/USD pair after the FED hike their interest rate prior to the closing of the year 2016. The bearish pressure in the Aussie dollar has been intensified Furthermore after FED chairperson Janet Yellen stated about three projected rate hike in the year 2017.According to the leading researchers, the Aussie dollar might struggle Furthermore in near future but before that, we can expect a nice bullish retracement towards to 38.2 percent Fibonacci retracement level. For the last two consecutive months, the pair has been subdued under the extreme level of bearish pressure. The pair has found some fresh buying power near the critical support level at 0.7420. Let’s see the technical chart for the AUD/USD pair:
Figure: AUD/USD pair heading towards the 38.2 percent Fibonacci retracement level
In the above figure, you can clearly see that the pair is forming nice higher lows associated with lower lows. The professional traders in are waiting to short this pair near the 38.2 percent Fibonacci retracement level drawn from the high of 21st March to the low of 9th may 2017.Though the professional investors in the forex trading community are overly cautious about this minor bullish retracement the optimistic traders are considering it as a golden opportunity to short this pair at a higher price.
Impact of retail sales data
The Aussie economy is suffering from extreme level of uncertainty from the very beginning of the year 2017.Despite such a weak performance in their economy, the AUD/USD pair has been showing nice bullish power in the global market due to the ongoing negative sentiment of the U.S consumer. Currently, the investors are eyeing on the 1st June retail sales data since a positive number will push the pair higher in the global market. Moreover, Private capital expenditure data is also going to be published on the same data and a decent growth in private expense will surely push the Aussie dollar higher in the global market. A strong positive data on 1st of June will push the pair higher towards the critical resistance level at .7490.A clear break of this resistance level will lead this pair towards the next critical resistance level at 0.7542 which is also the 50 percent retracement level of this pair. From this level the might see extreme selling pressure as a huge cluster of resistance resides above this level. US interest rate hike decision
FED chairperson has already declared that they are going to hike their interest rate as soon as possible to bring stability in their economy. In the last FOMC meeting minute, she also added that the U.S central bank will reassess their balance sheet before the end of the year 2017 and for this, the FED must hike their interest rate at least two times before the month of November. Keeping the U.S rate hike in mind most of the leading investors in the global community is adhering themselves from a long position in the AUD/USD pair. However, a significant delay in the U.S interest rate hike decision will push the Aussie dollar towards the 61.8 percent retracement level. And a clear break of the critical resistance level at 0.7590 will confirm the initial bottom formation of this pair near the critical support level at 0.7330.
Summary: Trading the financial instrument is a little bit tricky at the current moment as most of the investors don’t have any clear regarding the next movement of the mighty US dollar.However, an imminent rate hike with a hawkish statement from the FED will definitely push the AUD/USD pair lower in the global market. For the upcoming days, we don’t have any major US economic news release and the investors are cautiously waiting for a positive retail sales data in the Aussie economy. Considering all the parameters we will remain on the sideline until the market present more favorable trading conditions.
Save