AUD/USD seems bearish below 0.7600, FOMC statement eyed

Currently, AUD/USD is trading at 0.7564, down -0.25% or (19)-pips on the day, having posted a daily high at 0.7596 and low at 0.7551.

The Australian dollar vs. American dollar, over the last 7-trading sessions, lacked conviction and positive data to break above the relevant 0.7600 round figure mark. Furthermore, the unconventional US administration poses a substantial risk for global trade as 'Trump's protectionism' may have a profound impact on China's exports an important business partner for Aussies.  

Historical data available for traders and investors during the last 5-weeks indicates that AUD/USD pair had the best trading day  +1.18% (Jan.17) or 89-pips, and the worst at -0.81% (Jan.18) or 61-pips.

The devaluation rhetoric 
James Glynn, writer at The Australian, notes, "The Trump administration cranked up the tension in currency markets overnight with remarks suggesting Japan, China, and Germany were benefiting from weaker currencies, comments that pushed the US dollar to two-month lows early on Wednesday. “Every other country lives on devaluation,” President Donald Trump said at a meeting with US pharmaceutical executives. “They play the devaluation market and we sit there like a bunch of dummies.”

Trump's toxic jawboning not the only reason for USD moves

He further writes, "“The Trump administration’s temporary travel ban and other rapid-fire executive actions suggest he will further inflame tensions with Middle East Muslim countries,” said Greg Gibbs, a currency market analyst at Denver-based Amp GFX. Mr. Gibbs said he believes the president is generating a sense of instability and distracting attention from more productive reforms, with “the anti-trade message and antagonist approach to Mid-East Muslims, the EU, Mexico, and China likely to be viewed as negative for global growth.”

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 0.7608 (high Jan.24), then at 0.7660-80 region (horizontal resistance) and above that at 0.7730-50 region (horizontal resistance). While supports are aligned at 0.7527 (low Jan.30), later at 0.7457 (horizontal support) and below that at 0.7457 (low Jan.16). On the other hand, Stochastic Oscillator (5,3,3) seems to change direction and to move south, therefore, there is evidence to expect further US dollar gains in the near term. 

On the long term view, if 0.7834 (high April-2016) is in fact, a medium-term top, then the upside available is limited at 0.7809 (short-term 38.2% Fib). Furthermore, if the RBA is in 'no position' to increase rates in 2017, it faces a tough rival as the Fed expects to continue its path with 3-hikes (unless Trump's devaluation agenda take by surprise the Federal Reserve). To the downside, supports are aligned at 0.7433 (short-term 23.6% Fib), later at 0.7182 (reverse long-term 61.8% Fib) and below that back at 0.6826 (low Jan-2016).

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