- AUD/USD meets weekly resistance that puts the focus on the downside for the week ahead.
- Central bank divergence remains the driving force, US dollar is firming.
AUD/USD ended the week on the back foot as it ran into a layer of weekly resistance just ahead of 0.73 the figure. Down some 0.8% on the day, the pair finished Friday's session at 0.7223 after travelling between a range of 0.7122 and 0.7184.
The Australian dollar was unable o maximise on the mid-week blockbuster employment data and was capped around 0.7223 the high for the week. The US dollar found a last-minute bid during a risk-off US session and the US Dollar Index finished the week above the 96.00 figure for the third week in a row.
Central banks were the driving force with the Bank of England surprisingly hawkish, the European Central bank more hawkish than expected and the Federal Reserve ramping up rate hike expectations also.
This leaves the Reserve Bank of Australia lagging in this regard and the divergence between the central banks is a weight on the currency. Having said that, the recent string of stronger data supports prospects for an end of QE at the start of the new year.
For instance, a 366k monthly increase in employment was twice as strong as expected, considerably stronger than the bounce in June 2020 and therefore the biggest gain on record. In this regard, the RBA minutes will be a key event for the currency this week and analysts at TD Securities explained that ''markets are likely to focus on QE discussions and their impact on the rate hike timeline.'' ''Governor Lowe's recent speech noted 3 criteria for the Bank's QE decision: 1) other CB actions, 2) bond market functioning, 3) actual and expected progress towards employment and inflation target goals.''
AUD/USD technical analysis
As illustrated, the price reached a 38.2% Fibonacci retracement level on the weekly time frame through 0.72 the figure and would be expected to struggle at this juncture. This could result in a meanwhile downside correction for the week ahead and potentially lead to a downside continuation for the medium term.
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.
Recommended content
Editors’ Picks
AUD/USD extends its upside above 0.6600, eyes on RBA rate decision
The AUD/USD pair extends its upside around 0.6610 during the Asian session on Monday. The downbeat US employment data for April has exerted some selling pressure on the US Dollar across the board. Investors will closely monitor the Reserve Bank of Australia interest rate decision on Tuesday.
EUR/USD: Optimism prevailed, hurting US Dollar demand
The EUR/USD pair advanced for a third consecutive week, accumulating a measly 160 pips in that period. The pair trades around 1.0760 ahead of the close after tumultuous headlines failed to trigger a clear directional path.
Gold bears take action on mixed signals from US economy
Gold price fell more than 2% for the second consecutive week, erased a small portion of its losses but finally came under renewed bearish pressure. The near-term technical outlook points to a loss of bullish momentum as the market focus shifts to Fedspeak.
Bitcoin Cash could become a Cardano partnerchain as 66% of 11.3K voters say “Aye”
Bitcoin Cash is the current mania in the Cardano ecosystem following a proposal by the network’s executive inviting the public to vote on X, about a possible integration.
Week ahead: BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.