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  • AUD/USD turning heads fundamentally and technically.
  • Bullish technical forecasts seek out the 200-DMA.

AUD/USD is respecting the confluence resistance. Bears can cash in and the price will remain pressured at this juncture. AUD/USD is trading at 0.7016 at the time of writing, having tested below the figure.

While markets are away, the sure thing boils down to trade, not just a Sino/US theme, but Brexit and the general state of the EU as a huge thorn in the side of risk-FX and while the Aussie trades.

As for the domestic theme, and RBA is the major theme with QE on the cards. Data wise, November labour force data was solid and generally, its bullish in the immediate time, although, pricing for an RBA cut in Feb dropped back below 50%. Coupled with the ‘phase-one’ deal traction AUD can stay bid and the theme is supportive of risk FX into the New Year. 

2020 open, what’s in store?

“Our base case for the A$ is that it should weaken Q1/ Q2 2020 as the impact of the forecast Feb and June RBA rate cuts plus the beginning of a weakening in iron ore prices ($80 by June) kicks in,” analysts at Westpac argued, who, back in May, noted that a fair value was set to range between 0.64 to 0.69 in the second half of 2019 – a pretty accurate call. The analyst’s view, (RBA to cut Feb and June before QE), is contrary to the bullish technical forecasts above the 200-DMA.

“We would view any strength through the end of 2019 to 0.6950 as an opportunity to sell.”

Valeria Bednarik, Chief Analyst at FXSret notes that the technical indicators are retreating from extreme overbought levels, yet far from suggesting a downward extension ahead. “Also, the price is holding well above bullish moving averages, with the 20 SMA providing dynamic support at around 0.6960.”