AUD/USD continues consolidation within pennant since start of 2021, breakout likely

AUD/USD back below the 0.7750 mark on Wednesday, closing with losses of about 0.5%.
Focus will be on events stateside this week, with Biden unveiling stimulus plans, Fed Chair Powell and plenty of data.

Joel Frank Independent Analyst

AUD/USD came off the boil on Wednesday, closing FX trade with losses of about 0.5% or 40 pips and dropping back below the 0.7750 mark. The pair has been setting lower highs and higher lows since the start of 2021 and appears to be consolidating within a pennant structure that could be subject to a breakout.

To the downside, support comes in the form of an uptrend linking the 28 December high and the 4 and 11 January lows. A break below this trendline would open the door to a move towards the 21-day moving average at 0.7650, which also happens to coincide with the current 2021 low. Conversely, an upside break would likely lead to a challenge of last Friday’s 0.7800 high and perhaps the current 2021 high at 0.7820.

Aussie fundamentals

AUD has been for the most part focused on USD dynamics and global risk appetite. Hence, AUD/USD slipped on Wednesday in fitting with broad USD strength. That is likely to remain the case for the rest of the week, although AUD might also take some independent impetus from commodity prices (eyes will, as ever, be on the likes of oil, gold, copper and iron ore prices).

In terms of the key drivers for the rest of the week; AUD/USD will for the most part have its eyes stateside. Incoming US President Joe Biden unveils his fiscal stimulus plan on Thursday, on which day Fed Chair Jerome Powell also speaks. Eyes will also be on US data, including weekly jobless claims numbers on Thursday and December Retail Sales, December Industrial Production and January Michigan Consumer Sentiment numbers on Friday.

AUD/USD four hour chart

Author

Joel Frank

Independent Analyst

Joel Frank is an economics graduate from the University of Birmingham and has worked as a full-time financial market analyst since 2018, specialising in the coverage of how developments in the global economy impact financial asset

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold adds to Thursday's gains as softer bond yields drag USD to over one-week low

Gold attracts buyers for the second straight day on Friday amid a broadly weaker US Dollar, though it remains confined in a two-week-old range. The USD Index (DXY), which tracks the Greenback against a basket of currencies, fell to a nearly two-week low as Federal Reserve Chair Kevin Warsh’s remarks at the Annual IMF and World Bank Group Meetings did little to alter the rate outlook.

Busy week for Ripple’s RLUSD: What changes for stablecoin holders?

Ripple’s RLUSD is gaining ground across institutional finance, with a major bank launching custody services, a new wallet integration making it easier for developers to build payments and agentic experiences on the network, and a brokerage platform planning to use the stablecoin for settlement.

Hot inflation, falling yields: A new test for global markets

Global markets are confronting a difficult combination: renewed inflation pressure, expensive capital and growing scrutiny of the investment supporting the AI boom. The most revealing development this week was the demand for government bonds even as US inflation accelerated. My assessment is that investors should treat this as a test of financing resilience.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.