Fundamental view:

The Australian dollar has fallen during most of the week against the American dollar. The rationale behind this can be linked to the Hawkish Fed. The minutes from the Central bank’s December 16 meeting highlighted a discussion about reducing the bank’s $8.5 billion balance sheet. Fed also judged that conditions for a rate hike could be met soon suppose if the recent pace of labor market improvements continued. Inflation-related concerns made even the most dovish policymakers to favor rate hike.

On contrary, The Reserve Bank of Australia is with a view that it’s a matter of time that inflation will return to acceptable levels. Australian policymakers insisted that a rate hike would be unlikely, at least until 2024.

In this week, Commonwealth Bank Manufacturing PMI on 4th January, US Trade Balance on 6^th January and US nonfarm payroll on 7^th January  favored uptrend whereas JOLTS Job Openings on 4^th January and ANZ Job Advertisements monthly report on 5th January created downtrend for the pair.

The major economic events deciding the movement of the pair in the next week are Australia Building Approvals monthly report at Jan 10, Fed Chair Powell Testimony, Australia Retail Sales monthly report at Jan 11, EIA Crude Oil Stocks Change, US Federal Budget Balance at Jan 12, US Initial Jobless Claims at Jan 13, US Retail Sales monthly report and Fed Industrial Production yearly report at Jan 14.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was same as the previous week. Maintaining high at 0.7276 and low at 0.7129 showed a movement of 147 pips.

In the upcoming week we expect AUD/USD to show a bearish trend. The currency pair is trading below the 100 Simple Moving Average and the MACD trades to the downside. Should 0.7113 proves to be unreliable support then the pair may fall further to 0.7048 and 0.6966 respectively whereas a solid breakout above 0.7260 will open a clear path upward to 0.7342 and then will further raise up to 0.7407. In H4 chart inverted cup and handle pattern favors prospects of a bearish trend. Also to be noted bearish harami formation exerts the expectation of downtrend for the pair.