Upside and downside bias can be clearly defined now
The downside move today runs into a roadblock at the 100-hour MA (red line) as buyers lean on the level to defend the near-term bullish bias. There's also a near-term trendline support to provide an additional area for buyers to latch onto for the time being after failing to crack above the 200-day MA last week:
So, what's next for the pair?
Currently, the upside and downside bias can be clearly defined with the former needing to break above the 200-day MA @ 0.7290 to extend higher. Meanwhile, the latter needs to fall below the 100-hour MA (but I'd argue for a break below 0.7200) in order to gain momentum to establish a more bearish bias in the near-term - by aiming for a break below the 200-hour MA (now @ 0.7185).
In between, price is very much still playing ping pong as traders look to settle on a narrative and look for a significant break.
As for events to look out for this week, we'll have the RBA to come tomorrow but once again it is expected to be a non-event more or less. The aussie side of the equation feels very defined for now as we have all the pieces of the puzzle to make up what the picture looks like.
That leaves us with the dollar side of the equation, in which we'll slowly get more and more data releases that were delayed by the shutdown. That said, the data points lag all the way back to November last year so I'm not even sure if they would really matter all too much at this point.
Nonetheless, be wary of those releases as they will feed into the Fed's assessment of the economic situation and whether or not we may see any rate hikes to come this year.
The major outside factor in my view will be any developments in trade talks. But with China off for the week, I expect comments on the matter to be few and far between. However, we may hear a thing or two from US officials so that will be a key driver of risk sentiment which will influence the pair and the dollar.
Otherwise, just look out for the two key technical levels above i.e. 200-day MA and 100-hour MA/0.7200 handle as a break of those levels will be what makes the next directional move in the pair.
