Forex Market: AUD/USD daily trading outlook

Yesterday’s trade saw AUD/USD within the range of 0.6826-0.6929. The pair closed at 0.6873, going up 0.22% on a daily basis. It has been the 3rd gain in the past 11 trading days. In addition, the daily low was a higher-low test of the low from January 15th.

At 10:17 GMT AUD/USD was gaining 1.05% for the day to trade at 0.6938. The pair touched a daily high at 0.6943, overcoming the upper range breakout level (R4), and a daily low at 0.6839 during mid-Asian trading session. Resistance may be encountered at the hourly 200-period EMA (0.6970) and then – in the area around the high from January 15th (0.7005). A break and close above 0.7005 may target the high from January 13th (0.7050). Support, on the other hand, may be expected at the hourly 100-period EMA (0.6919), then – at the hourly 55-period EMA (0.6898), and finally – in the area around the current daily low (0.6839).

On Tuesday AUD/USD trading may be influenced by the following macroeconomic report listed below.

Fundamentals

United States

NAHB Housing Market Index

The National Association of Home Builders (NAHB) Housing Market Index probably remained at 61.0 for the second consecutive month in January, according to market expectations. If so, this would be the 19th consecutive month, when the gauge stood in the area above 50.0. In November the index was reported at 62.0. The indicator is based on a monthly survey in regard to current home sales and expected sales in the coming six months. Values above the key level of 50.0 indicate that housing market conditions are good. Therefore, higher-than-projected readings would provide a moderate support to the US dollar. The official report is scheduled for release at 15:00 GMT.

Bond Yield Spread

The yield on Australian 2-year government bonds went as high as 1.934% on January 18th, after which it closed at 1.924% to lose 4.8 basis points (0.048 percentage point) compared to January 15th.

The yield on US 2-year government bonds climbed as high as 0.854% on January 18th, after which it closed at 0.849% to lose 0.001 percentage point compared to January 15th. It has been the 16th drop in the past 24 trading days and also a fifth consecutive one.

The spread between 2-year Australian and 2-year US bond yields, which reflects the flow of funds in a short term, narrowed to 1.075% on January 18th from 1.122% on January 15th. The January 18th yield spread has been the lowest one since January 14th, when the difference was 1.068%.

Meanwhile, the yield on Australian 10-year government bonds soared as high as 2.696% on January 18th, after which it slid to 2.691% at the close to lose 2.2 basis points (0.022 percentage point) compared to January 15th.

The yield on US 10-year government bonds climbed as high as 2.047% on January 18th, after which it slipped to 2.045% at the close to add 0.008 percentage point compared to January 15th. It has been the 10th gain in the past 24 trading days.

The spread between 10-year Australian and 10-year US bond yields narrowed to 0.646% on January 18th from 0.676% on January 15th. The January 18th yield difference has been the lowest one since January 14th, when the spread was 0.611%.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for AUD/USD are presented as follows:

R1 – 0.6882
R2 – 0.6892
R3 (range resistance) – 0.6901
R4 (range breakout) – 0.6930

S1 – 0.6864
S2 – 0.6854
S3 (range support) – 0.6845
S4 (range breakout) – 0.6816

By using the traditional method of calculation again, the weekly pivot levels for AUD/USD are presented as follows:

Central Pivot Point – 0.6914
R1 – 0.7005
R2 – 0.7140
R3 – 0.7231

S1 – 0.6779
S2 – 0.6688
S3 – 0.6553