The AUD/USD traded lower during last week’s trading session after reports showed that the Australian Consumer Price Index worsened from 0.8% to 0.6% which weakened the Australian currency. Reports also showed that its Trimmed Mean Consumer Price Index also worsened from 0.7% to 0.5%. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
Weekly bias remains on the downside with a fresh cross of the 21 and 55 EMA’s on the 4hours time-frame. The MACD and RSI oscillators also show sign of bearish continuation in the medium term picture. More declines to 0.92408 support is expected and a break of the support might bring about a total reversal to the downside.
However caution should be applied as long term picture still remains bullish on the daily charts. I suggest caution should be applied when price gets to 55EMA on the daily charts. A buying from the dip can be taken if we get a rejection pattern on the 55EMA which might see price head northward again to 0.94595 resistance.
Key Economic Important indicators to watch out for in the coming week are AUD PPI q/q, USD Advance GDP q/q, USD Manufacturing PMI and USD Employment statistics.