General analysis AUDUSD for 27.05.2022

Current dynamics

The Australian dollar continues to rise for a second straight day amid weak macroeconomic data released in the US yesterday. The US Bureau of Economic Analysis on Thursday, showed that the US economy contracted slightly more than originally expected in the first quarter of 2022. US GDP contracted by 1.5% in the first quarter of 2022, 0.2% worse than forecast.
The pair was also helped by positive macroeconomic data out of Australia. Retail sales in Australia jumped to a record high of 0.9% in April. This means that consumers were actively spending despite high inflation and higher interest rates. Notable was a 9.6% year-on-year increase in sales volume. Such dynamics indicate a successful implementation of the Australian government's plans, which hoped that households would spend their savings to continue to consume even in the face of declining real incomes.
On the other side, the strength of the Australian dollar was due to the improving epidemiological situation in the People's Republic of China, as China is a major market for Australian exports.
Also, worth noting are concerns over escalating tensions between the US and China and the possibility of US military intervention in case of a Chinese invasion in Taiwan. Earlier, US President Joe Biden noted that the difficult geopolitical situation could affect market sentiment as a whole, adding to the slowdown in economic growth and inflation.

Gross domestic product data will be among the most important data on the economic calendar in Australia next week. The factual data could cause strong AUDUSD volatility if the results are very different from the expected.  

Support and resistance levels

On the 4-hour chart, the instrument is consolidation in the upper range of Bollinger Bands. The indicator has corrected sideways. The Momentum histogram is above the 100 level, which gives sell signals,

• Support levels: 0.71250, 0.70850, 0.70375, 0.70000.
• Resistance levels: 0.72200, 0.71650.

Trading scenarios

• Buy stop position may be opened from the level 0.71650 with target 0.72200 and stop-loss 0.71250. Implementation period: 2-3.
• Sell stop position may be opened from the level of 0.71250 with target 0.70850 and stop-loss 0.71650 Implementation period: 2-3 days.