Current trend

The AUD/USD pair is showing confident growth, developing quite an active upward trend in the short term, which leads to the renewal of record highs. The instrument is testing 0.6930 for a breakout, above which it last rose only in February 2023. At the same time, the current macroeconomic backdrop does not provide support to the Australian dollar: Private Sector Credit in August increased by only 0.5% month-on-month and 5.7% year-on-year, which coincided with forecasts.

Meanwhile, China's Services PMI for September showed a decline from 50.3 points to 50.0 points, beating analysts' expectations for 50.4 points, while the National Bureau of Statistics' (NBS) Manufacturing PMI rose to 49.8 points from 49.1 points, beating market expectations for 49.5 points. In turn, the Caixin Manufacturing PMI from S&P Global fell significantly from 50.4 points to 49.3 points, and the Services PMI — from 51.6 points to 50.3 points. However, investors are cautiously optimistic as the People's Bank of China steps up measures to stimulate economic growth, with the latest round announced on Friday.

Meanwhile, the number of people in financial difficulty, according to the Reserve Bank of Australia (RBA), is currently small, but could increase significantly if the national economy slows more than expected, or if interest rates remain at peak levels for a longer period. As in the March report, officials note that about 5.0% of homeowners with adjustable-rate mortgages have incomes that are not sufficient to offset the financial institutions' costs. Less than 1.0% were more than 90 days in arrears, and lenders expect the trend to continue to accelerate slightly in the future. In addition, the number of insolvencies of national companies has also increased in the last two years following the cancellation of state compensation during the COVID-19 pandemic.

Meanwhile, the US currency remains under pressure amid expectations of further monetary easing by the US Federal Reserve. Last Friday, market participants paid attention to the August statistics on inflation in the US: the Personal Consumption Expenditures Price Index fell from 2.5% to 2.2% in annual terms with a forecast of 2.3%, and in monthly terms — from 0.2% to 0.1%, while the Core PCE adjusted from 0.2% to 0.1% in monthly terms and from 2.6% to 2.7% in annual terms. The US dollar later strengthened after the University of Michigan Consumer Confidence Index rose to 70.1 points in September from 69.0 points, while analysts had expected 69.3 points.

Support and resistance

Bollinger Bands on the daily chart show a steady increase. The price range expands, freeing a path to new local highs for the "bulls". MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, which had previously tried to develop a downward trend, is reversing upwards again, approaching its highs and signaling the risks of the Australian dollar being overbought in the ultra-short term.

Resistance levels: 0.6950, 0.7000, 0.7050, 0.7100.

Support levels: 0.6907, 0.6872, 0.6825, 0.6800.

Trading tips

Long positions can be opened after a breakout of 0.6950 with the target of 0.7050. Stop-loss — 0.6907. Implementation time: 1-2 days.

A rebound from 0.6950 as from resistance, followed by a breakdown of 0.6907 may become a signal for opening of new short positions with the target at 0.6825. Stop-loss — 0.6950.