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 lost 100 points. The pair closed just above the 0.76 line. There are only 3 events next weekHere is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

In the US, Fed Chair Yellen missed the chance to move the dollar, as she sent out a dovish message after the rate hike. Unemployment Claims were unexpectedly weak, soaring to 261 thousand. In Australia, the RBA minutes were upbeat about the economy, but expressed concern about risks in the housing market.

Updates:

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

  1. RBA Assistant Guy Debelle: Monday, 22:00. Debelle will speak at an event in Sydney.  A speech which is more hawkish than expected is bullish for the Australian dollar.
  2. HIA New Home Sales: Thursday, 00:00. This indicator provides a snapshot of the strength of the housing sector. In January, the indicator disappointed with sharp decline of 2.2%.
  3. Private Sector Credit: Friday, 00:30. The indicator slipped to 0.2%, short of expectations. This was the indicator’s weakest reading in 7 months.

AUD/USD Technical Analysis

AUD/USD opened the week at 0.7705 and climbed to a high of 0.7749, testing resistance at 0.7741(discussed last week). It was all downhill after that, as the pair dropped to a low of 0.7604. AUD/USD closed the week at 0.7605.

Technical lines from top to bottom:

We start with resistance at 0.8066.

0.7938 is next. This line has held in resistance since May 2015.

0.7835 was the high point in April 2016.

0.7741 was a cap in February.

AUD/USD closed the week at 0.7605, which is protecting the 0.76 line.

0.7513 is providing support. It was a cushion in April 2015.

0.7429 is next.

0.7311 marked a low point in November.

0.7223 is the final support level for now.

I am bearish on AUD/USD

In the US, the Fed has sent clear signals that it is projecting two more rate hikes this year. This has disappointed the markets and lowered investors’ appetite for risk. President Trump has failed to pass a key health care bill and remains embroiled in scandals.

Our latest podcast is titled Murky markets and further Fed fallout

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Further reading:

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