AUD/USD: increase in volatility (video)
By Elizaveta Belugina
Australian dollar rose in the first days of the week as the RBA’s Governor Stevens wasn’t as dovish as one could expect and didn’t repeat that the national currency is overvalued. In addition, a government report showed annual inflation accelerated to the highest level in 4 years at 3%. The news made traders pare bets that the Reserve Bank of Australia will cut interest rates next year and it will be now more difficult for the central bank to talk the Aussie down. On Thursday the pair fell as US dollar strengthened after American unemployment claims declined to the lowest level in 8 months.
As a result, AUD/USD didn’t manage to hold above $0.9450 and slid to the levels right above $0.9400. Australian dollar has reached the upper daily Bollinger band and moved decisively lower retracing more than a half on the big bullish candle formed on Wednesday. The loss of $0.9400 may provoke a decline to the 55-day MA at $0.9360 and probably even to $0.9325. If Australian currency falls to this level, we will once again be considering the scenario involving formation of a top with targets at $0.9220. On the upside, resistance levels to conquer remain the same: $0.9450, $0.9470 and $0.9500.
Volatility has increased and together with the possibly better data out of the US this might limit demand for the Aussie.