AUD/USD seems to have breached the 1.0500 major psychological level already and appears poised to test the next resistance at 1.0600. Take note that this is in line with the top of the long-term range visible on the 4-hour or daily time frames.
Stochastic has already made its way into the overbought region, suggesting that a move down is possible later on. However, the oscillator has yet to turn from the overdone area and show momentum going south, so AUD/USD might still have a bit of room to climb.
Chinese data has been weak so far this week as the CPI failed to meet expectations. The inflation figure clocked in an annual 2.1% reading, lower than the estimate at 2.5% and the previous month’s reading of 3.2%. Chinese PPI also came in worse than expected at -1.9%, hinting at lower inflationary pressures in the coming months. Their trade balance also disappointed as the figure showed a 0.9 billion USD deficit instead of the projected 15.2 billion USD surplus.
If the 1.0600 level holds as resistance, AUD/USD might be on its way back to 1.0200 for the near term. Take note though that U.S. data, such as the FOMC minutes and the retail sales reports, could keep dollar buying at bay.
By Kate Curtis from Trader’s Way