The current calendar year saw AUD/USD testing a high of 0.8137 and low of 0.7020. Currently, it is trying hard to remain afloat above 0.7200 level and trades at 0.7207 at the time of writing. When we analyse the past one month movement the pair did made a strong attempt to head northward and touched a peak of 0.7260 on 2nd November but hit a strong resistance hurdle around this level.
AUD/USD has managed to break out of a rough one-month sideways pattern when it mostly traded in the zone of 0.7050 and 0.7150. The breakout was very sharp and fast when it hit 0.7260 but soon the enthusiasm ended and it started to fall gradually mainly due to the Sino-American ongoing tension and as trade talks are not happening. This would continue to punish the Chinese economy, and most certainly, the Australian economy will suffer as a result.
Last week, Australia’s seasonally adjusted Retail Sales for September came at 0.2%, missing the forecasted 0.3%. However, Australia’s quarterly PPI came in at 0.8%, beating the 0.2% forecast and well over the previous quarter’s 0.3%.
Entire FX market is likely to be volatile this week as later today we have mid-term Election Day in the U.S. If the Republican Party keeps, control of the House and Senate then market could see a risk-on. This should also be bullish for the U.S. economy, which will keep the Fed on-track for its plans to continue to raise interest rates throughout 2019. However, any loss of control by Republicans can see market going in a risk-off mode as a knee jerk reaction. AUD/USD is likely to trade in the range of 0.7100 to 0.7260 in the near term. Once, these levels get broken it will set a new direction for the pair.