Fundamental view:

The Australian dollar has broken down significantly during the week, to reach through the 0.70 handle. The commodity-linked currency declined, however, after the Reserve Bank of Australia’s Governor Philip Lowe hinted an upcoming rate cut.  Speaking at the Citi Group annual investment conference on Thursday, Lowe said further monetary easing would support jobs growth and alleviate currency pressures, hinting a possible cut to a record low of 0.1%. Extraordinary monetary stimulus is no surprise to investors in the current pandemic scenario that put the world in recession.

US Unemployment Claims and Empire State Manufacturing Index on 15^th October created a bullish atmosphere for the pair whereas US NFIB Small Business Index on 13^th October and US Core PPI on 14^th October created a bearish environment for the pair.

The major economic events deciding the movement of the pair in the next week are Fed Chair Powell Speech at Oct 19, RBA Meeting Minutes, US Building Permits at Oct 20, Australia Retail Sales monthly report at Oct 21, US Initial Jobless Claims at Oct 22, and US Markit Manufacturing PMI at Oct 23.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 0.11% lower than the previous week. Maintaining high at 0.7234 and low at 0.7056 showed a movement of 179 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 0.7010 may open a clean path towards 0.6943 and may take a way down to 0.6831. Should 0.7188 prove to be unreliable resistance, the AUDUSD may raise upwards 0.7301 and 0.7367 respectively. In H4 chart descending triangle breakout favors prospects of a bearish trend. Also to be noted Bearish engulfing formation exerts the expectation of downtrend for the pair.