The Australian Bureau of Statistics is set to release its Trade Data for January on Thursday at 00.30 GMT, with expectations that the Trade Surplus will widen to 3,900M MoM, up from 3,373M in December [1]. The Trade Balance is a key indicator of net export performance, and a positive result is generally supportive for the Australian Dollar (AUD) [1]. Ahead of the data release, AUD/USD is trading positively, gaining ground as the US Dollar (USD) has ignored strong US employment and ISM Services PMI data [1].
On Wednesday, the AUD/USD pair reversed its course, climbing approximately 0.61% as the US Dollar weakened due to improved market sentiment, which was bolstered by solid US economic data [2]. At the time of writing, AUD/USD trades at 0.7077, near the day's high [2]. The technical outlook for AUD/USD remains bullish, with momentum constructive as indicated by the Relative Strength Index (RSI) above its 50-neutral level and trending higher [2]. If bulls reclaim the March 3 daily high of 0.7122, a decisive break could expose the yearly high of 0.7147 and the psychological level of 0.7200 [2]. On the downside, the first support is at 0.7000, with further support at the March 3 swing low of 0.6944 and the 50-day SMA at 0.6904 [2].
The Australian Dollar was the strongest against the Swiss Franc this week, as shown in the percentage change table, with AUD/CHF up 1.85% [2]. Against the US Dollar, the AUD rose 0.32% this week [2]. Market sentiment is currently risk-on, which is positive for the AUD [1].
If the upcoming Trade Data exceeds expectations, it could further lift the AUD, with resistance levels at the March 3 high of 0.7133, the February 12 high of 0.7147, and the 0.7200 psychological level [1]. Extended losses could see a drop to the March 2 low of 0.7033, the February 9 low of 0.7007, and the February 5 low of 0.6940 [1].
CONCLUSION
The Australian Dollar is trading positively against the US Dollar ahead of the January Trade Data release, with technical and sentiment indicators suggesting further upside potential if the data meets or exceeds expectations. The AUD has shown strength against major currencies this week, particularly the Swiss Franc and the US Dollar. Market participants are watching key resistance and support levels for AUD/USD, with the trade balance data likely to be a catalyst for further movement.