The trend has been shifting since early February for AUD/USD

Keeping Short on AUD/USD As the Bearish Case Gets Stronger

Posted Friday, February 17, 2023 by
Skerdian Meta • 2 min read

AUD/USD has seen some volatile price action, going up and down, with that sort of price action continuing yesterday as well. The soft Australian jobs report which showed a decline of -11.5K jobs vs expectations of +19.8K was the initial event to send the AUD lower . The unemployment rate moved up to 3.7% in January from 3.5% in December.

The bearish move took the price down to the zone between 0.6855 and 0.68706 where this pair initially found support, with some buyers within that area . The low in the Asian session reached 0.6867 before bouncing back to the upside.

But, the run higher fell short when buyers faced moving averages. The 200 moving average came in near 0.6935 where the climb stopped. Sellers leaned against the moving average and buyers turned into sellers, reversing this pair back down and eventually breaking below the support zone, as the low reached 0.6842 on my broker’s chart.

Then came the stronger-than-expected US PPI report which gave this pair another push to the downside, as it suggests more consumer inflation coming up. The price retraced back up above the support, but sellers remain in charge overall, as highs keep getting lower.

We remain short on this pair and are selling retraces higher against moving averages. After closing a winning forex signal here on Wednesday, we opened another sell AUD/USD signal yesterday, which is looking good once again.

Statement Headlines from RBA Governor Lowe via Reuters

  • High inflation is damaging and corrosive
  • Will do what is necessary to make sure that inflation returns to the target range.
  • It would be dangerous, indeed, not to contain and reverse this period of high inflation
  • Based on the currently available information, the board expects that further increases will be needed over the months ahead
  • How much further interest rates need to increase will depend on developments in the global economy, how household spending evolves and the outlook for inflation and the labour market.
  • Path here is a narrow one
  • It is important that people expect that the high inflation is only temporary.
  • One is the risk of not doing enough, which would result in high inflation persisting and then later proving very costly to get down. The other is the risk that we move too fast, or too far
  • Inflation expectations remain well anchored and aggregate wage outcomes are not inconsistent with inflation returning to target
  • It is still possible for us here in Australia to navigate this path
  • But it is also possible that we are knocked off that narrow path
  • Very conscious that the impact of higher rates is being felt very unevenly across the community.

AUD/USD Live Chart

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Related Articles
0 0 vote
Article Rating
Notify of
Inline Feedbacks
View all comments