AUD/USD Weekly Forecast: US-China Deal Hopes Drive up Dollar

• The AUD/USD weekly forecast shows rising dollar demand.

• The Fed kept rates unchanged as expected.

• A trade deal between the US and the UK eased trade war fears.

The AUD/USD weekly forecast shows rising dollar demand as market participants hope for a US-China trade deal.

Ups and downs of AUD/USD 

The AUD/USD pair had a bearish week as the Fed kept interest rates unchanged and noted that the outlook for the economy remained uncertain. At the same time, the dollar bounced higher on trade deal optimism. 

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The Fed kept rates unchanged as expected during this week’s meeting. Moreover, Powell maintained his cautious tone, saying there is still no clarity about the economy’s direction. Meanwhile, a trade deal between the US and the UK eased trade war fears. Additionally, it raised hopes for another deal between China and the US that would end the ongoing trade war.

Next week’s key events for AUD/USD 

Next week, traders will get to analyze US inflation and retail sales. At the same time, Australia will release its employment figures, shaping the outlook for Reserve Bank of Australia rate cuts. The Fed is waiting to see whether Trump’s tariffs have reheated price pressure in the economy. Meanwhile, policymakers are also waiting to see the state of economic demand. 

A jump in inflation and weaker sales will highlight the effects of Trump’s tariffs on the economy. The Fed would then have to weigh inflation and growth. Still, signs of a recession will force policymakers to cut interest rates. 

AUD/USD weekly technical forecast: Bulls trigger a range breakout

On the technical side, the AUD/USD price has pulled back to retest a key support and resistance zone after a recent breakout. The price sits above the SMA, and the RSI is above 50, showing bulls are in the lead. 

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For a long time, AUD/USD has maintained a sideways move between the 0.6200 support and the 0.6351 resistance, often puncturing the levels. At the same time, the price chopped through the SMA. At one point, bears strengthened enough to trigger a breakout. However, the price soon reversed into the range area, confirming a false breakout. 

This move gave bulls enough confidence to break above the resistance zone. The price is currently retesting this zone and the SMA. If bulls are ready for a new trend, the price will bounce higher next week, likely hitting the 0.6602 resistance.

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