Browsing: AUD/USD Forecast

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 stocks and commodities rise and when the atmosphere improves. It tends to fall when things get worse: geopolitical risks increase.

The A$’s technical behavior is usually one of the best out there. 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. 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 still have an impact, but not as strong as in the past.

The days of AUD/USD parity are gone, but the pair is moving to the high 70s, and a move higher cannot be ruled out.

Latest weekly AUD/USD forecast

AUD/USD reversed directions last week and posted modest losses. The pair closed the week at 0.7528. This week’s key event is CPIHere is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

In the US, construction figures were mixed and manufacturing and employment numbers missed their estimates. The Aussie softened after the RBA minutes expressed concern about the domestic employment and housing sectors.

Updates:

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

  1. CPI: Wednesday, 1:30. CPI is released each quarter, magnifying the impact of each release. The index dipped to 0.5% in Q4, short of the forecast of 0.7%. The estimate for Q1 stands at 0.6%.
  2. Trimmed Mean CPI: Wednesday, 1:30. This indicator excludes the most volatile items which make up CPI. The indicator remained unchanged in Q4 at 0.4%, shy of the forecast of 0.5%. The forecast for Q1 stands at 0.5%.
  3. RBA Governor Philip Lowe Speech: Thursday, Tentative. Lowe will speak at an event in Sydney. The markets will be looking for clues regarding future monetary moves by the RBA.
  4. Import Prices: Thursday, 1:30. The indicator posted a small gain of 0.2% in Q4, ending a nasty streak of four straight declines. The markets are braced for a decline of 0.4% in Q1.
  5. Private Sector Credit: Friday, 1:30. The indicator rebounded in January with a gain of 0.4%. Will the indicator post another gain in February?

AUD/USD Technical Analysis

AUD/USD opened the week at 0.7579 and quickly climbed to a high of 0.7611. The pair then reversed directions and dropped to a low of 0.7485, testing support at 0.7513 (discussed last week). The pair closed the week at 0.7528.

We begin with resistance at 0.7938. This line has held since May 2015.

0.7835 was the high point in April 2016.

0.7741 was a cap in February.

0.7605 has strengthened in resistance as AUD/USD lost ground last week.

0.7513 was tested in support and is a weak line.

0.7429 is the next support line.

0.7311 marked a low point in November.

0.7223 is the next support line.

0.7105 has held since March 2016. It is the final support level for now.

I am neutral on AUD/USD

The US economy is doing well, but the markets are not impressed with Trump’s first 100 days in office. Stronger global demand has boosted demand for Australian products, but US protectionism remains a serious risk.

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