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AUD/USD forecast and technical analysis ► review of the major events that will move the Australian Dollar (Aussie) during the upcoming week.  Here is some general information. Scroll down for the latest AUD/USD outlook

Aussie/USD characteristics

The Australian dollar is a “risk” currency. It tends to do well when commodities and stocks rise and when the mood improves. It tends to fall when things get worse: geopolitical risks increase and the outlook for global demand slumps.

The A$’s technical behavior is usually very impressive. This implies respecting lines of support and resistance, trend lines, etc. AUD/USD has become more popular for techies in recent years, even after the financial crisis which saw the end of the famous “carry trade.”

Australia exports commodities, mostly of metals such as iron and copper. We often find a correlation between the price of iron ore and the A$. The commodity boom kept Australia out of recession for around 25 years. The land down under enjoyed the mining boom related to Chinese growth. While the mining boom has probably peaked regarding growth, the sector still churns out quite a lot, as China has a soft landing.

AUD/USD Recent Moves

Interest rates have been dropping in recent years, after an early post-crisis hike cycle. However, it seems that the new governor of the RBA, Philip Lowe, is not keen to take them lower.. Chinese data releases (such as the Caixin PMI) are having a growing influence once again, especially as they impact iron prices.

The days of AUD/USD parity are gone. Among the 6 factors impacting the Aussie the bears seem to have the upper hand.

Latest weekly AUD/USD forecast

AUD/USD Forecast July 24-28 2017

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AUD/USD enjoyed another strong week, gaining 90 points. The pair closed at 0.7912, its highest weekly close since December 2014. The major event this week is CPI. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

In Australia, employment gains slowed, but were still close to the estimate. Over in the US, political risk continues to rise, as Trump’s failure to pass a healthcare bill triggered a fresh wave of US dollar selling. The revelation that Special Counsel Mueller is expanding his investigation into Trump’s business dealings also contributed to the greenback’s losses.

Updates:

AUD/USD daily graph with support and resistance lines on it. Click to enlarge:

  1. CPI: Wednesday, 1:30. CPI is the primary gauge of consumer spending, and an unexpected reading can have a sharp impact on the movement of AUD/USD. In Q1, the index remained unchanged at 0.5%, just below the estimate of 0.6%. The estimate for Q2 stands at 0.4%.
  2. Trimmed Mean CPI: Wednesday, 1:30. This indicator excludes the most volatile items which comprise CPI. The index improved to 0.5% in Q1, matching the forecast. Another reading of 0.5% is expected in Q2.
  3. RBA Governor Philip Lowe Speaks: Wednesday, 3:05. Lowe will speak at an event in Sydney. The markets will be looking for clues regarding the RBA’s future monetary policy.
  4. Import Prices: Thursday, 1:30. Import Prices rebounded in Q1 with a strong gain of 1.2%, crushing the estimate of -0.4%. This marked the highest gain since 2015. The estimate for Q2 is 0.7%.
  5. PPI: Friday, 1:30. This inflation level is released on a quarterly basis. The indicator was unchanged in Q1, recording a gain of 0.5%. This was above the forecast of 0.3%. The markets are expecting another gain in the second quarter, with a forecast of 0.6%.

AUD/USD Technical Analysis

AUD/USD opened the week at 0.7824 and quickly touched a low of 0.7781. The pair then reversed directions and climbed to a high of 0.7988, as resistance held at 0.8031.

Technical lines from top to bottom:

We start with resistance at 0.8295.

0.8163 has held in resistance since May 2015.

0.8031 is protecting the symbolic 0.80 level.

0.7938 is next.

0.7835 was the high point in April 2016.

0.7749 was an important cap in March.

0.7611 is the next support level.

0.7513 is the final support line for now.

I am bullish on AUD/USD

There are growing doubts that whether the Fed will raise rates in December, with inflation stuck at low levels and mixed numbers for the second quarter. With the Trump administration doing little more than treading water, investors could sour on the US dollar.

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Further reading:

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