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.

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

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.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD hits fresh one-month low amid souring market mood

EUR/USD has been extending its falls and dips below 1.21 as US retail sales badly disappointed and the worsening mood is supporting the safe-haven dollar. Markets digest Biden's stimulus plan. US Consumer Sentiment declined to 59.2 points. 


GBP/USD retreats toward 1.36 amid fresh dollar strength

GBP/US has pared its gains and falls toward 1.36 as the dollar gains ground. The UK economy shrank by 2.6% in November, better than estimated. The UK is ramping up its vaccination campaign and PM Johnson is pressured to ease the lockdown. 


Gold extends sideways grind near $1,850

The XAU/USD pair registered small daily gains on Thursday but struggled to extend its recovery amid a lack of significant fundamental drivers on Friday. As of writing, the pair was up 0.15% on a daily basis at $1,849.

Gold news

Forex Today: Markets “sell the fact” on Biden's stimulus, dollar rises, retail sales eyed

Markets are on the back foot after Biden hinted about tax hikes while introducing stimulus. The safe-haven dollar is edging higher despite Powell's pledge to keep monetary policy accommodative. 

Read more

DXY breaks above key downtrend, eyes move above 91.00

USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.

US Dollar Index News