AUD/USD Forecast Jan. 13-17 – Aussie Dips as Iran Crisis Spook Investors

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AUD/USD lost ground last week for a second straight week, as the pair closed at the 0.69 level. There are just two releases in the upcoming week. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.

Tensions in the Middle East weighed on investor risk appetite, which hurt the Australian dollar. The currency managed to recover some losses on Friday, as Chinese GDP remained steady and the U.S. posted weak job numbers. Australian numbers were strong last week. Building Approvals jumped 11.8%, its strongest gain since February. Retail sales gained 0.9%, above the forecast of 0.5%.
In the U.S., business activity continues to expand, as Services PMI improved to 55.0, up from 53.9 points. However, employment numbers for December were a major disappointment. Nonfarm payrolls fell to 145 thousand, compared to 266 thousand a month earlier. This missed the estimate of 162 thousand. Wage growth slipped from 0.3% to 0.1%, and fell shy of the forecast of 0.1%. The unemployment rate was unchanged at 3.5%.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
  1. MI Inflation Gauge: Monday, 0:00. This Melbourne Institute indicator provides analysts with a monthly look at inflation, as CPI is only released each quarter. The indicator has remained at low levels in recent months and came in at zero in November.
  2. Chinese GDP: Friday, 2:00. China’s economy has been slowing since early 2018, when growth was 6.8%. The trade war with the U.S. has dampened economic activity, as GDP dipped to 6.0% in Q3 of 2019. The fourth-quarter reading is expected to remain unchanged at 6.0%.

AUD/USD Technical Analysis

Technical lines from top to bottom:

We start with resistance at 0.7340. This is followed by 0.7250.

0.7165 has held firm since early April.

0.7085 has been a resistance line since July. This is followed by 0.7022.

0.6960 has some breathing room in resistance, following losses by AUD/USD last week.

0.6865 (mentioned last week) is an immediate support level.

0.6744 is next.

0.6627 has held in support since March 2009. It is the final support line for now.

I am bullish on AUD/USD

With the U.S. and Iran both lowering the flames, risk appetite should improve next week, barring any unforeseen clashes between the two countries. This is bullish for the Australian dollar.

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Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.