Aussie is up marginally as the surprise trade deficit gave traders a reason to hesitate. There’s still dollar weakness around as the Kiwi and the British Pound is also up against the USD. Dollar weakness may be attributed to hopes around a US-Iran peace deal. All in all AUD/USD remains constructive, but not bulletproof.
Currency Heat Map
Source: TradingView
Australia Trade balance Miss Hits Aussie Dollar Sentiment
This isn’t looking good for the Australian economy. Its trade balance flipped to a A$1.84B deficit in May, far away from the A$4.25B forecasted surplus. The commodity export support argument for the AUD/USD has been weakened fairly. This result could be read as softer external demand, weaker export receipts, or a cooling in terms of trade impulse.
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Bar Chart Showing Australia’s Monthly Balance of Trade
Source: TradingView
Some Bearish Divergence on AUD/USD
There is some bearish divergence going on on the Renko for AUD/USD. The Z-Score SMA has turned lower while AUD/USD is turning higher. The Supertrend has flipped negative so there is some resistance there to push through for the FX Pair. AUD/USD is above trend so these moves only appear to be short term consolidation moves before another burst higher.
0.001-Brick AUD/USD Renko Showing Bearish Divergence
AUD/USD Renko Chart with 0.001 Brick Size
Source: TradingView
The Verdict
Current Trend Direction: Bullish
Bias: Positive
Support Levels: 0.6833,0.70305
Resistance Levels: 0.72715, 0.74070
Medium Term Path: AUD/USD is above trend and is expected to remain above trend in the medium term. There is some divergence on the FX pair so upmoves may be stagnated over the next couple of sessions. The next real test is 0.72715. A break above there will open up 0.7407.
