AUD/USD Outlook: Bulls looking to seize control near 0.7500 ahead of Australian CPI

  • AUD/USD gained traction for the second straight day amid the prevalent risk-on mood.
  • The ongoing USD recovery from one-month lows might keep a lid on any further gains.
  • The market focus now shifts to this week’s key macro releases from Australia and the US.

The AUD/USD pair kicked off the new week on a positive note and edged higher for the second successive session on Tuesday. The dominant risk-on mood in the markets continued acting as a tailwind for the risk-sensitive Australian dollar amid the recent widespread rally in commodity prices. The uptick, however, lacked bullish conviction in the wake of a pickup in the US dollar demand. The latest outbreak of COVID-19 infections in China has raised worries about the imposition of economically damaging lockdowns amid the country's zero-tolerance approach to the disease. This, along with the prospects for an early policy tightening by the Fed, drew some haven flows towards the greenback.

The Fed Chair Jerome Powell reaffirmed on Friday that the US central bank will soon begin tapering its bond purchases. Adding to this, fears about a faster than expected rise in inflation have been fueling speculations about a potential interest rate hike in 2022. Investors seem convinced that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation. This was reinforced by elevated US Treasury bond yields, which assisted the USD to build on the previous day's solid rebound from one-month lows. Nevertheless, the pair, so far, has managed to hold 
with its modest intraday gains as the focus now shifts to this week's key data from Australia and the US.

Australian quarterly inflation data is scheduled for release during the Asian session on Wednesday. The risk in the third quarter is that prices might have retreated due to the reintroduction of lockdown measures to fight the Coronavirus Delta variant. A softer print will validate the resolutely dovish Reserve Bank of Australia (RBA) and weigh on the domestic currency. Beyond this, the market focus will be on Thursday's release of the Advance US Q3 GDP growth report, which will set the tone heading into the RBA and FOMC policy meetings next week. In the meantime, Tuesday's US economic docket – featuring the releases of the Conference Board’s Confidence Index, Richmond Manufacturing Index and New Home Sales – will be looked upon for some impetus.

Technical outlook

From a technical perspective, the emergence of some dip-buying on Monday and the subsequent move up favours bullish traders. With technical indicators on the daily chart holding comfortably in the bullish territory, the stage seems set for a move towards retesting multi-month tops, around the 0.7545 region touched last week.

However, the lack of any strong follow-through buying warrants some caution before positioning aggressively for a further appreciating move. Meanwhile, any meaningful pullback might continue to find decent support and attract fresh buying near mid-0.7400s. A convincing break below might prompt some technical selling and drag the pair back towards the 0.7400 round-figure mark. The corrective pullback could further get extended towards the 0.7320-15 strong horizontal resistance breakpoint, which should act as a strong near-term base for the major. 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD defends 1.1300 even as yields refresh 10-week low

EUR/USD remains sidelined near 1.1320 during early Thursday morning in Asia, following a mildly negative daily performance. The currency major’s latest moves disagree with the fall in the US Treasury yields and the market sentiment.


GBP/USD stays pressured towards 1.3155

GBP/USD holds lower grounds near 1.3280, retreating towards the yearly low during Thursday’s Asian session. Although the cable pair grinds above the 2021 bottom marked on Tuesday, descending RSI line and sustained trading below the short-term key support, now resistance, keeps bears hopeful.


Gold still depressed despite the better market mood

Gold recovered on Wednesday alongside the market’s mood, currently trading in the $1,780.00 region. The bright metal advanced on easing demand for the American currency, as stocks turned green following Tuesday’s setback. 

Gold News

Bitcoin to blast off to $100,000 following Plan B’s Stock-to-Flow model

Analysts are evaluating the probability of Bitcoin hitting fresh all-time highs before the end of 2021. There is a spike in fear among Bitcoin traders, but open interest in the futures market remains high despite sell-off. 

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!