Australian Dollar Outlook:
- The Australian Dollar[1] enjoyed a boost from strong jobs data[2] and receding RBA rate cut odds
- AUD/USD[3] forfeited the entirety of Thursday’s gains as broader risk aversion took hold
- Similarly, AUD/CAD[4] tested the 200-day simple moving average before retracing beneath 0.90
Australian Dollar (AUD) Forecast: AUD/USD, AUD/CAD Rebounds Stall
Strong jobs data helped to reduce RBA rate cut odds on Thursday, but broader risk aversion – as evidenced by price action on indices like the Nasdaq[5] 100 – worked to erode the gains initially enjoyed by the Australian Dollar. Last week I noted AUD weakness may persist in the medium term[6], although Thursday’s jobs report could look to shore up the currency’s standing somewhat. Still, various technical barriers exist overhead that may look to keep the Australian Dollar contained, despite the newfound cause for bullishness.
AUD/USD Outlook
In the case of AUD/USD[7], a long upper wick on the Thursday candle highlights the transition from AUD strength to weakness as risk appetite receded. Furthermore, the retracement saw the pair slip beneath the 200-day moving average around 0.6865 which coincides with horizontal resistance from the May 2019 swing low. Together, the two levels will look to rebuke further attempts higher. Should they fail, subsequent resistance likely resides at 0.69.
AUD/USD Price Chart: Daily Time Frame (December 2018 – January 2020)
On the other hand, prolonged risk aversion could pressure AUD/USD lower still. Beyond the 2016 low which will look to offer a modicum of support in the interim, subsequent support resides around the descending channel marked by the various highs from the last two years. As the Australian Dollar seeks direction, follow @PeterHanksFX[8]
