- The AUD/USD weekly forecast shows upside potential as the dollar loses ground.
- Moody’s downgraded the US government’s credit rating on Monday.
- The RBA lowered interest rates and signaled more to come.
The AUD/USD weekly forecast shows upside potential as the dollar loses ground on US fiscal health concerns.
Ups and downs of AUD/USD
The AUD/USD pair had a bullish week as the dollar fell on US fiscal health concerns. The Australian dollar strengthened despite a rate cut by the Reserve Bank of Australia.
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Moody’s downgraded the US government’s credit rating on Monday, citing a growing debt. Furthermore, Trump’s tax bill, which could increase the debt burden, raised concerns about the country’s fiscal health. As a result, the US dollar fell, allowing the Aussie to climb. However, it eased briefly after the RBA lowered interest rates and signaled more to come.
Next week’s key events for AUD/USD
Next week, market participants will focus on key releases from the US, including durable goods orders, FOMC minutes, and GDP. The durable goods orders and GDP reports will show the state of the economy, shaping the outlook for Fed rate cuts.
Traders will focus on the FOMC meeting minutes, which might contain clues on the outlook for Fed rate cuts. Cautious minutes will lower bets for a September rate cut. On the other hand, if policymakers are worried about the economy, bets might increase, weighing on the dollar.
AUD/USD weekly technical forecast: Bulls face a solid resistance zone
On the technical side, the AUD/USD price is on the verge of breaking above a solid resistance zone comprising the 0.5 Fib retracement and the 0.6500 key psychological level. Previously, the price was trading in a steep downtrend below the 22-SMA. However, the downtrend slowed down after bulls broke above the SMA and prompted a corrective move.
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However, bears made a last impulsive leg that retested the 0.6003 key support level. From here, bulls emerged and took charge by pushing the price above the 22-SMA. However, the new rally paused when it met the current resistance zone. A break above this zone would strengthen the bullish bias and confirm a new direction. Moreover, it would allow AUD/USD to climb to the next resistance at the 0.6802 level.
On the other hand, if the resistance zone holds firm, the price will likely break below the SMA and resume its previous downtrend.
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Saqib Iqbal
