During yesterday’s trading session, two consecutive breaches of the support levels of 114.23 and 114.42 ended the range phase for the Ninja and paved the way towards the resistance zone of around 115.50. In the negative direction, the mentioned level of 114.42 is now acting as a support, and the former lower border of the range at 113.40, in which the pair was previously trading, is the major support for the pair.
AUDUSD US inflation continues to break records. Due to skyrocketing inflation in the US, the AUD/USD pair corrects upwards, trading at 0.7173.
Although the next peak in the incidence of COVID-19 in Australia can be considered passed, the statistics on new infections remain quite high: last week, the figure hovered around 1450 cases per day, which does not allow the authorities of some regions to ease quarantine restrictions. As stated by the head of the Bank of Australia, Philip Lowe, it prevents the economy from recovering at a higher pace, which, in turn, keeps the national currency from more dynamic growth.
The US dollar has been moving within a narrow sideways range since the end of November. According to the latest data, the rate of inflation in the United States accelerated, and the index of the core CPI reached 4.9% YoY. The consumer price index renewed a multi-year record, rising to 6.8% from 6.2% a month earlier. Judging by these data, the US Federal Reserve has practically no choice: the regulator will have to quickly reduce the volume of the quantitative easing (QE) program and raise the interest rate. These actions can be announced at the next meeting, held on Wednesday.
Support and resistance
On the global chart, the price forms a downtrend, within which a reversal is being prepared. Technical indicators keep a weakening sell signal: indicator Alligator’s EMA fluctuations range narrows, and the AO histogram forms upward bars.
The negative move of the pound against the U.S. dollar continues as trading remains above the support of 1.3575. If the bulls manage to gain enough momentum and successfully lead the currency pair above the resistance of 1.3665, it could spell the end of the downward movement. Otherwise, a drop below the 1.3575 support level could lead to a deepening of the sell-off. The PMI services data for the UK (09:30 GMT), as well as the news mentioned in the EUR/USD analysis, could lead to increased volatility during today’s session.
The attempt to breach the support of 1.1623 was not successful and, at the time of writing this analysis, the currency pair is preparing to test the resistance zone between 1.1668 and 1.1687. A violation of the mentioned zone will pave the way towards the next goal of 1.1750, a breach of which would strengthen the positive expectations for the future path of the EUR/USD. On the downside, bears could attack the support level of 1.1623 and, if successful, could easily deepen the drop towards the level of 1.1582. A spike in volatility is likely during the announcement of the economic data for the initial jobless claims for the U.S. (today; 12:30 EEST).
The dollar lost most of the week’s gains after a wave of sell-offs around 114.92. The pair is thus again finding itself in the range between 113.41 and 114.41. Currently, the sentiment is rather neutral, with the bears prevailing if prices fall below 113.77. In such a scenario, a breach of 113.41 and a test of the support at around 112.75 can be expected. The bulls still have a chance to test the 114.92 resistance again, and a weekly close around this zone would significantly increase the odds of a new rally developing. Should sentiment shift to safe haven assets instead, there may be more declines coming for the Ninja.
NZDUSD the instrument is weakening. Due to the growth of the US dollar, the NZD/USD pair corrects, trading near the level of 0.6822.
The number of new cases of infection with the Delta strain in New Zealand is on the rise, and Prime Minister Jacinda Ardern has announced that the country would not be able to completely get rid of the pandemic, so there was little point in restrictions, and 0othey would be lifted. As for the economic indicators, a foreign trade report was recently published. According to the October data, the volume of exports increased to 5.35B dollars, while imports amounted to 6.64B. The trade balance reached –1.286B MoM, which is better than –2.206B for September, and –4.920B YoY, down from –4.110B a month earlier.
The American currency index is growing, reaching the level of 96.700. Against the background of a hiatus in trading due to Thanksgiving Day, the key growth drivers for the dollar are the news of the re-election for a second term of the head of the US Federal Reserve, Jerome Powell, and the largest decline in the number of applications for unemployment benefits in the last 50 years: the figure fell to 199K.
Support and resistance
The asset left the ascending channel, breaking the support line. Technical indicators keep a stable sell signal: fast EMAs on the Alligator indicator is below the signal line, and the histogram of the AO oscillator trades in the sell zone, forming downward bars.
The currency pair is currently trading in the range between 1.3359 and 1.3439 after the bears lost momentum and couldn’t overcome the support at 1.3359. The forecasts for today’s trading session are for the pair to retest the support at 1.3359 and a successful breach of the mentioned level would pave the way for the pair towards the support at 1.3290. On the other hand, a breach of the resistance at 1.3439 may lead the pair towards the next resistance at 1.3503.
