The pair’s recovery last week signals short term bottoming is in play at 0.6825 low. Further rise could be seen initially this week with 21 EMA converging 55 EMA to the upside and SSRC oscillator indicating further momentum to the bullish side could be seen. However i’d expect strong resistance from 0.7096 (support turn resistance) to limit upside and bring fall resumption. Break of 0.6826 will extend the larger down trend. Though, sustained break of 0.7096 (December 17, 2015 low) will turn focus back to 0.7383 resistance.
In the week ahead, investors will be looking to Wednesday’s Fed policy statement for any indication that the bank is considering slowing the path of interest rate increases this year. Also AUD CPI q/q will be closely monitored earlier in the day.
Markets will also be looking to Friday’s data on U.S. fourth quarter gross domestic product, which is expected to show that growth slowed to a modest 0.8% from 2.0% in the third quarter.