AUDUSD Trading Analysis: Key Levels, Market Sentiment, and Upcoming Economic Indicators

The AUDUSD currency pair has been facing significant resistance over the past two days, struggling to break above the 0.6600 level on both the 4-hour and daily timeframes. While this persistent rejection may seem bearish at first glance, a closer examination of the monthly and weekly charts suggests otherwise. In this post, we’ll explore the current trading dynamics of AUDUSD, key levels to watch, and the potential impact of upcoming economic indicators, including the CORE PPI and CPI.

Recent Price Action and Key Levels

Struggle Below 0.6600: A Short-Term Barrier

For the past two days, AUDUSD buyers have been attempting to penetrate the 0.6600 resistance level without success. This key level has proven to be a formidable barrier, leading to repeated rejections. However, it’s essential to recognize that these rejections don’t necessarily signal a bearish trend.

The Bigger Picture: Bullish Potential on Higher Timeframes

Despite the short-term struggles, the monthly and weekly timeframes paint a more optimistic picture. Both timeframes indicate a strong upside potential, suggesting that the current resistance could be a temporary hurdle before a more significant bullish movement.

Key Support Level: 0.6550

One critical level to monitor is the 0.6550 support. If the price retraces to this level and finds support, it could trigger a renewed buying interest, leading to a potential rally. Buyers could then target key resistance levels at 0.6600, 0.6700, and even as high as 0.6900.

AUDUSD Trading Analysis: Upcoming Economic Indicators and Their Impact

CORE PPI and CPI: Fuel for the Next Move?

This week, traders are closely watching the release of the CORE Producer Price Index (PPI) and the Consumer Price Index (CPI). These economic indicators are crucial as they provide insights into inflationary pressures and could significantly influence the AUD/USD pair’s direction.

  • CORE PPI: Scheduled for release tonight, the CORE PPI could ignite a significant move in the AUD/USD pair. Traders should be vigilant, as price movements and positioning for Wednesday’s CPI release might begin as early as today.
  • CPI: The CPI, set for release on Wednesday, is another red folder event that could further fuel the AUD/USD’s movement. A higher-than-expected CPI could strengthen the case for a bullish continuation, especially if the price holds above the key 0.6550 support.

Wage Price Index: An Early Indicator

Today’s Wage Price Index report has shown some movement in the AUD/USD pair, but the asset remains indecisive below the 0.6600 resistance. While it may be tempting to consider short positions given the repeated rejections, caution is advised. The broader market sentiment remains bullish, and going short could be risky in the current environment.

Trading Strategy and Considerations

Monitoring Key Levels

Given the current market conditions, traders should keep a close eye on the 0.6550 support level. A bounce from this level could signal the start of a new bullish phase, with targets set at 0.6600, 0.6700, and 0.6900. Conversely, a sustained break below 0.6550 might challenge the bullish outlook, though the overall trend on higher timeframes remains upward.

Economic Data Vigilance

With the CORE PPI and CPI releases on the horizon, traders need to stay alert to potential volatility. The AUD/USD pair could experience sharp movements around these data releases, and positioning ahead of time could be crucial.

Conclusion

The AUDUSD pair is at a critical juncture, with buyers struggling to overcome the 0.6600 resistance on lower timeframes. However, the broader market structure on monthly and weekly charts suggests that a significant bullish movement could be on the horizon. Key economic indicators, including the CORE PPI and CPI, will likely play a pivotal role in determining the next direction for the AUD/USD. Traders should stay observant, especially around the 0.6550 support level and upcoming data releases, to capitalize on potential opportunities.

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