Fundamental view:

The Australian dollar initially rallied during the course of the trading week but gives back the gains and reached the 0.76 level. Weakness in the Aussie may have been for a couple of reasons. The first reason is the drop in iron ore prices, with the Dalian Commodity Exchange (DCE) futures contract down over 17% from the May 12th peak. The second reason could be due to a decline in Australian 10-year government bond yields, signaling that the markets may be pricing in a slightly more dovish RBA. This may be due to another temporary lockdown in Melbourne.

Australia Construction Work Done quarterly report on 26^th May and Australia Private New Capital Expenditure on 27^th May favored uptrend whereas US S&P/CS HPI Composite-20 yearly report on 25^th May and US EIA Crude Oil Stocks Change & US EIA Cushing Crude Oil Stocks Change on 26^th May favored downtrend for the pair.

The major economic events deciding the movement of the pair in the next week are OPEC Meeting, RBA Interest Rate Decision, US ISM Manufacturing PMI at Jun 01, Australia GDP quarterly report, US ADP Nonfarm Employment Change, Australia retail sales monthly report, US EIA Crude Oil Stocks Change Jun 03, Fed Chair Powell Speech and US Nonfarm Payrolls at Jun 04.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 0.22% lower than the previous week. Maintaining high at 0.7795 and low at 0.7676 showed a movement of 119 pips.

In the upcoming week we expect AUD/USD to show a bearish trend.  The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 0.7657 may open a clean path towards 0.7607 and may take a way down to 0.7538. Should 0.7776 prove to be unreliable resistance, the AUDUSD may raise upwards 0.7845 and 0.7895 respectively. In H4 chart Symmetrical triangle breakout favors prospects of a bearish trend. Also to be noted bearish engulfing formation exerts the expectation of downtrend for the pair.