Fundamental view:

The Australian dollar plummeted against the American dollar during the trading course of the week. The monetary policy announcement from the central bank was the major catalyst in underpinning the uptrend of the US dollar. The Central bank has left the rate unchanged however he also made a notable change of tone toward the hawkish side. The major market mover was Fed Chair noting that he will not rule out rate increase at every meeting this year. He also opened the door to 50bp rate hikes rather than standard 25bp. On the economy front, Powell said “quite a bit of room to raise rates without hurting employment” and stressed that sustaining a long economic expansion means price stability.

Additionally, The Aussie seems to be pressured by the falling prices of metals, Yellow metal had shed roughly $50 per troy ounce in the last two days. And the Silver fell to $22.60.

In this week, Australia CPI quarterly report on 25^th January and US Retail Inventories monthly report on 26^th January favored uptrend Whereas Commonwealth Bank Manufacturing PMI on 24^th January, FOMC press conference on 26^th January and US Core Durable Goods Orders monthly report on 27^th January favored downtrend for the pair.

The major economic events deciding the movement of the pair in the next week are RBA Interest Rate Decision, Australia Retail Sales monthly report, US ISM Manufacturing PMI at Feb 01, RBA Governor Lowe Speech, US ADP Nonfarm Employment Change, EIA Crude Oil Stocks Change at Feb 02, Initial Jobless Claims, US ISM Non-Manufacturing PMI at Feb 03 and US Nonfarm Payrolls at Feb 04.    

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 1.21% lower than the previous week. Maintaining high at 0.7187 and low at 0.6967 showed a movement of 220 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. Should 0.6904 proves to be unreliable support then the pair may fall further to 0.6825 and 0.6684 respectively whereas a solid breakout above 0.7124 will open a clear path upward to 0.7265 and then will further raise up to 0.7344. In H4 chart descending scallop pattern formation favors prospects of a bearish trend. Also to be noted bearish harami formation exerts the expectation of downtrend for the pair.