AUD/USD- Technical Analysis for Forex Trading & CFDs.
Australia – Cash Rate
On Tuesday, at GMT 4:30 a.m., the Reserve Bank of Australia (RBA) released the official cash rate, which is the interest rate that major Australian banks and financial institutions pay to borrow funds held at the RBA.
Since short-term interest rates are the primary factor in the valuation of the Australian Dollar against other major currencies, Forex traders pay close attention to any changes in the official cash rate.
The RBA left the cash rate at 1.5% in their last meeting and the forecast for this month is that the RBA will leave the cash rate unchanged at 1.5% for the time being.
United States – ISM Non-Manufacturing PMI
On Wednesday, at GMT 2:00 p.m., the US based Institute for Supply Management (ISM) released its monthly Non-Manufacturing PMI figure, which measures the level of a diffusion index created by surveying purchasing managers. However, the ISM’s PMI figure excludes the non-manufacturing sector.
Forex investors consider the ISM Non-Manufacturing PMI figure to be a leading economic indicator because purchasing managers have the most updated view of the economy.
Last month, the ISM’s PMI figure came out at 53.9 and the forecast for this month is set at a slightly higher figure, at 55.5.
After remaining highly bullish since the beginning of May and climbing close to 700 pips, the AUD/USD traded sideways over the last few weeks. Last week, the pair found support near the uptrend line, then promptly went up to the resistance near 0.7995. However, it has so far failed to close above the 0.7995 level and currently, trading just below it.
As the ISM Non-Manufacturing PMI forecast is set to improve compared to last month, but the Australian cash rate is expected to remain unchanged at 1.5%, we believe the fundamental outlook for AUD/USD would remain bearish. However, given that the AUD/USD price was rejected around the uptrend line last week, we believe the bullish momentum is very strong at the momentum. Therefore, if the US ISM Non-Manufacturing PMI comes lower than the forecast of 55.5 and the AUD/USD breaks above the resistance near 0.7995, then the pair might find additional bullish momentum in the market.
Hence, Australian Forex traders should look out for trading opportunities above this major resistance level around 0.7995.