AUD/USD Forecast: After escaping from the abyss, central banks' verdict awaited

AUD/USD rides higher with stocks

The US Dollar initially rallied on the slightly better than expected and highly anticipated US inflation report. However, the turnaround was swift due to several factors, with stock markets turning positive and the risk on sentiment taking over. The Australian dollar was able to take advantage of this quite well, nearing 0.80.

Australia gained 16,000 jobs in January, roughly within early expectations. The Unemployment Rate remained unchanged at 5.5%, meeting projections. RBA Governor Phillip Lowe said that a weaker Australian Dollar is more favorable than a stronger one, but his tone was not very different from the usual stance of the RBA's rate statements. 

Late in the week, the pair fell back down as the US Dollar recovered. 

RBA stands out

RBA Assistant Governor Michele Bullock will give a speech, serving as a warm-up for the main event of the week: the RBA's Meeting Minutes. The details of the central bank's first meeting of 2018 may shed some more light on the future monetary policy moves. The Statement of Monetary Policy (SOMP) showed a cautious approach.

Later in the week, the Wage Price Index will be of interest amid the growing importance of salaries all over the world. Construction Work Done, New Motor Vehicle Sales, and the Private Captial Expenditure dot the calendar as well. 

Here are the events that will shape the Australian dollar as they appear on the economic calendar:

US events: Fed Focus

After a week packed with economic indicators, the Federal Reserve will have its say. Various FOMC members will be speaking throughout the week, but the primary attention may be on the FOMC Meeting Minutes from the January meeting. The last meeting led former Fed Chair Janet Yellen saw minor hawkish changes. The minutes may reveal how much the members are coalescing around a more optimistic view of the economic and of price pressures. 

Later on, the calendar is packed with Fed officials speaking out. They may react to the latest inflation reports. 

Here are the more critical US events from the forex calendar:

AUD/USD Technical Analysis - Escaped from the abyss?

The recovery that the Aussie Dollar staged turned the previous drop into a correction just before it was about to turn into an outright downfall. The pair bounced off the 200-day Simple Moving Average quite remarkably and later recaptured the 50-day SMA, as the chart shows. 

The RSI is back to the positive ground above 50 while momentum is still weighing on the pair. Looking at Fibonacci retracements from the 0.8130 peak to the 0.7760 trough, we can see that the pair found resistance at the 38.2% level coming in at $0.7980. Further above, the pair may find resistance at $0.8050, the 23.6% level and also a high point in January. The $0.8130, a double-top, continues towering over the pair.

Looking down, we can note the round $0.7900 level as the 61.8% level. It is followed by $0.7870 which capped the pair on its way up in early January and also the 50-day SMA. Further below, the aforementioned $0.7760 bottom is notable, and a break opens the door towards $0.7650, the high point in December, and finally, $0.7500, the base in mid-December. 

What's next for AUD/USD?

While the technical levels point slightly higher, the fundamental picture leans a bit lower. The Fed may remind the markets that it is set to raise rates while the RBA will want to weigh on the Australian dollar. As we have seen in recent weeks, the stock market mood will have a significant impact as well. All in all, AUD/USD may be pressured but not fall too far.

The FXStreet Forecast Poll shows a bullish sentment on the AUD/USD in the short term. This is contrary to the stance seen here.