AUD/USD Forecast: Aussie rejected at 0.7200
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- The AUD/USD was rejected at 0.7200 as it trades above the upward sloping trendline.
- The prospects of a solid Australian labor market in November underpin Aussie.
- The US Federal Reserve is expected to raise the target range for Fed funds to 2.25%-2.50% with the monetary policy outlook is in the focus.
- Fresh US dollar selling and the rebound in copper prices failed to support the upside momentum on Aussie.
The AUD/USD is trading little changed at around 0.7180 after failing to break above 0.7200 before the Federal Reserve is expected to deliver a dovish rate hike later on Wednesday. The main driver for the currency pair stems from the outlook for the US monetary policy from the Federal Reserve.
The Australian labor market is expected to remain solid in creating 20.0K new jobs in November with the unemployment rate stuck to 5.0% early on Thursday.
The markets focused on the outlook for Fed policy in 2019 with policymakers possibly signaling the pause to its rate hiking cycle while delivering broadly expected rate hike in December.
The market participants expect the Fed to repeatedly underline the conditionality and data dependency for the future policy move.
Technically the AUD/USD is supported by a trendline connecting the cyclical low on AUD/USD at 0.7020 and last Friday’s low of 0.7150. The technical oscillators are mixed with Momentum pointing downwards while the Relative Strength Index is still pointing upwards in neutral territory. The Slow Stochastics made a bullish crossover in the oversold territory on a daily chart. The AUD/USD is poised to benefit from a solid labor market report and dovish Fed outlook for monetary policy. The rebound in copper prices also supports the commodity currency like Aussie. The currency pair should remain supported by the trendline support heading higher towards 0.7280 representing the immediate target and a 23.6% Fibonacci retracement of a fall from 2018 high of 0.8100 to 0.7020 cyclical low.
AUD/USD daily chart
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