AUDUSD Teeters on 0.7532 Ahead of Q1 CPI

After gapping up to start the week, the AUDUSD is now trading below Friday’s close. It didn’t take long for sellers to sniff out an opportunity following the weekend gap which was triggered by the outcome of the France elections on Sunday.

Following a successful short last week, I’m also on the hunt for another opportunity. However, with Australia CPI just around the corner at 9:30 pm EST, I’ll wait for the dust to settle before considering an entry.

As for levels, the pair just closed below a key level at 0.7532 on a 4-hour closing basis. The next support level from here is the stubborn 0.7495 handle. This is an area that has held on three separate occasions since the pair closed above it on January 17th.

Below 0.7495 is my target from last week at 0.7380. It’s the 61.8% Fibonacci retracement from the December 2016 low to the current 2017 high. It’s also the location of two prominent swing highs from October and December of 2015.

Alternatively, should the AUDUSD find a bid at current levels, the next key resistance comes in at 0.7608. This area has served as a pivot since January 24th and is also last week’s high.

I mentioned it at the end of March, but the twelve-month wedge pattern outlines the extreme boundaries for any range play here.

Should the AUDUSD close today’s session below 0.7532, the level will likely attract sellers on a retest as new resistance. Key support, of course, comes in at 0.7495 with a close below that exposing 0.7380.

For those who saw yesterday’s AUDNZD commentary, you may be wondering how a weaker Australian dollar will affect the bullish outlook for the cross. Oddly enough, the Aussie isn’t the primary driver for the AUDNZD, at least not at the moment.

The correlation between the AUDUSD and the AUDNZD stands at just +5.9% on a daily closing basis. The NZDUSD, on the other hand, is correlated to the tune of -68.1% at the time of this writing.

Those correlations do change over time, so it’s something to keep an eye on for sure. But as long as the technicals are pointing to a higher AUDNZD and a lower AUDUSD, that’s how I’ll approach the two currency pairs.

As for the AUDUSD, it would be prudent to wait for the 0.7500 support area to fail on a daily closing basis before considering an entry. You’ll avoid the risk associated with the upcoming Q1 CPI, and the break of a key level will give you more confidence in any resulting setup.

To be clear, I’m staying rather neutral here until I have more information with which to make a decision, which could also be to do nothing.

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