Fundamental view:

The Australian dollar traded high against the American dollar during the trading course of this week, despite of the broad US dollar strength. The US reported the January Consumer Price Index, which soared to 7.5% YoY against the forecast of 7.2%,and the jump was the highest level since February 1982. This led to the market expectation that the Fed might adopt a more aggressive policy stance to combat high inflation and market priced for a 50 bps rate hike in March which helped the USD bulls but the Aussie managed to trade upside.  However, the bullish momentum remains capped for the quote – AUD/USD due to the prevailing cautious sentiment which will weigh on the perceived riskier Aussie. Nevertheless, the pair remained on track and posted the second successive weekly gains.

Australia NAB Business Confidence on 8^th February and US CPI MoM and YoY report on 11^th February framed downtrend whereas Australia Retail Sales quarterly report on 7^th February and US Michigan Consumer Sentiment on 11^th February favored uptrend for the pair.

The major economic events deciding the movement of the pair in the next week are RBA Meeting Minutes, NY Fed Empire State Manufacturing Index at Feb 15, US Retail Sales monthly report, EIA Crude Oil Stocks Change, FOMC Minutes at Feb 16, Australia Employment Change, Initial Jobless Claims and US Philadelphia Fed Manufacturing Index at Feb 17.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 1.12% higher than the previous week. Maintaining high at 0.7248 and low at 0.7065 showed a movement of 183 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 upside. Should 0.7048 proves to be unreliable support then the pair may fall further to 0.6965 and 0.6865 respectively whereas a solid breakout above 0.7231 will open a clear path upward to 0.7331 and then will further raise up to 0.7414. In H4 chart rising wedge pattern breakout favors prospects of a bearish trend. Also to be noted bearish engulfing formation exerts the expectation of downtrend for the pair.