AUD/USD: Poised to break the top of the five-month ascending channel

AUD/USD has reached 29-month highs as the pair touched 0.7572 on Friday before ending at 0.7535, up 1.4% on the week and 1.9% in December. The fundamental background supporting the Australian dollar should improve further as the global economy moves into recovery in the next two quarters. Meanwhile, the upper border of the five-month-old rising channel at Friday’s close is not a substantial impediment, FXStreet’s Analyst Joseph Trevisani briefs.

Key quotes

“ China will not be the only major industrial power attempting to restart growth with a combination of industrial and consumer stimulus. Demand for raw materials will continue to rise in the early stages of the renaissance and the scope for gains in resource currencies will be strong.”

“The rising channel that debuted in early June has reached the limit of functionality and should not offer much resistance. The week’s close at the channel’s upper border and nearly a two-and-a-half-year high will negate any minor technical obstacle.”

“Initial resistance at 0.7600 is weak with a more definite level at 0.7670. The Australian dollar ranges of the last two years have been an anomaly largely based on the US-China trade dispute and then the COVID-19 pandemic. Historically, currency markets have been comfortable with a considerably stronger AUD/USD. That ease is about to return.”