Current dynamics

The AUD/USD pair is correcting in a sideways trend at 0.6488 amid a weakening US dollar and stable dynamics of the Australian currency.

According to the Australian Bureau of Statistics (ABS), private new capital investment accelerated by 1.1% month-on-month and 1.0% year-on-year in September, while building construction spending rose by 1.1%, driven by a 1.1% rise in equipment and machinery prices. The largest year-on-year gains were seen in construction (33.3%), electricity and gas (10.9%) and transport (8.3%). The weighted average consumer price index rose to 2.1% year-on-year, compared with a forecast of 2.5%, as a result of government energy and rent subsidies, but the underlying figure strengthened to 3.50% from 3.25%, remaining above the Reserve Bank of Australia’s (RBA) target range of 2.00–3.00%. Thus, the likelihood of maintaining peak interest rates is quite high: experts are confident that officials will not begin easing monetary policy before May.

The US dollar is holding at 106.10 in the USDX, retreating from last Friday’s high of 108.10, weighed down by economic and labor market reports: in the third quarter, gross domestic product (GDP) slowed to 2.8% from 3.0%, and the deflator fell to 1.9% from 2.5%. Personal household income in October adjusted to 0.6% from 0.3%, and spending to 0.4% from 0.6%, above expectations of 0.3%. The core personal consumption expenditure price index changed to 2.8% from 2.7%, and the broader measure to 2.3% from 2.1%, meeting analysts’ expectations, as a result of which US Federal Reserve officials may abandon the 25 basis point interest rate cut at the December meeting. The number of initial claims for unemployment benefits for the week decreased from 215.0 thousand to 213.0 thousand, but the total number of applications increased from 1.898 million to 1.907 million.

Support and resistance levels

On the daily chart, the trading instrument is correcting above the support line of the “expanding formation” pattern with dynamic boundaries of 0.7000–0.6360.

Technical indicators are slowing down the sell signal: fast EMAs on the Alligator indicator are directed downwards, keeping a stable distance from the signal line, and the AO histogram is in the sell zone.

Resistance levels: 0.6530, 0.6630.

Support levels: 0.6460, 0.6360.

Trading scenarios

Short positions can be opened after the price declines and consolidates below 0.6460 with a target of 0.6360. Stop loss is 0.6510. Implementation period: 7 days or more.

Long positions can be opened after the price rises and consolidates above the level of 0.6530 with the target at 0.6630. Stop loss is 0.6480.