General analysis AUDUSD for 28.12.2021

Current Dynamics

This week the pair AUD/USD demonstrates minimal growth. Investors are inclined to sell safe-haven U.S. currency as rejection of QE and 2-3 rounds of key rate hike has already been taken into account by the market. Aggressive withdrawal of monetary stimulus and further rate hikes will obviously slow down the U.S. GDP, but this is not a reason for active long-term investment in high-risk assets. The trading volume after the Christmas vacations and before the New Year's celebration is limited. The strengthening of major currencies against the dollar is likely to be short-lived speculative in nature.

At the same time, a new strain of COVID-19 is spreading very rapidly in Australia and casts doubt on the recovery of economic activity in the country. During the previous day 11264 new cases of coronavirus were registered in Australia. The government does not want to reinforce social distancing measures again, but state leaders are already discussing internal border controls. 

Also worth noting is China's intention to loosen its key interest rate. The government wants to actively lend to small and medium-sized businesses, as well as to help large developers survive the crisis in the industry. Such monetary policy of China will support domestic demand, in particular demand for raw materials and energy, which will lead to higher inflation. In the case of such a scenario, the Fed may act even more aggressively, which will provide long-term support for the dollar.

Today at 17:00 (GMT+2) the U.S. consumer confidence index will be published.

Support and resistance levels

On the 4-hour chart the instrument is consolidating in the upper part of the Bollinger Bands. The indicator is turning sideways and the price range has contracted, indicating the presence of corrective dynamics. MACD histogram is in the positive zone, holding a buy signal. Stochastic entered the overbought area, a strong sell signal is expected within 1-2 days.

• Support levels: 0.7090, 0.7125, 0.7070, 0.7215, 0.7230.
• Resistance levels: 0.7255, 0.7290, 0.7325, 0.7360.

Trading scenarios

• Long positions should be opened above the level of 0.7260 with a target of 0.7330 and a stop-loss at 0.7195. Implementation period: 1-3 days.
• Short positions can be opened below the level of 0.7200 with a target of 0.7150 and a stop loss at the level of 0.7230. Implementation period: 1-3 days.