Fundamental view:

Australian dollar went back and forth against the US dollar during the trading course of the week. Multiple catalysts like inflation, aggressive policy from the Fed, China’s slowing economy and Russia’s potential military action favored the US dollar while upbeat employment and inflation data favored the Aussie. Australia faced many lockdowns throughout last year 2021 and has started reopening’s by the end of the year. This is the reason it showed outstanding job creation in November, followed by an upbeat December report released this week. Australia added 64.8K positions in the month, which is more than double of the market’s expectations. Moreover January Consumer Inflation Expectations contracted to 4.4% from 4.8% previously.

On the other hand, The US central bank is about to have a monetary policy meeting next week and will announce the monetary policy decision on January 26. Traders are expecting for clearer hints about upcoming rate hikes. Investors are pricing in a first rate hike for March 2022 and at least three hikes through the year.

In this week, Australia Unemployment Rate and US initial Jobless claims on 20th January and framed uptrend whereas TIC Net Long-Term Transactions on 18th January and Westpac-MI Consumer Sentiment monthly report on 19th January favored downtrend for the pair.

The major economic events deciding the movement of the pair in the next week are RBA Weighted Median CPI quarterly report, US CB Consumer Confidence Index at Jan 25, Fed Interest Rate Decision, FOMC Press Conference at Jan 26, US GDP quarterly report, US Core Durable Goods Orders monthly report, Initial Jobless Claims at Jan 27, Australia PPI quarterly report and Michigan Consumer Sentiment at Jan 28.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 0.51% lower than the previous week. Maintaining high at 0.7276 and low at 0.7169 showed a movement of 107 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 0.7136 proves to be unreliable support then the pair may fall further to 0.7099 and 0.7029 respectively whereas a solid breakout above 0.7243 will open a clear path upward to 0.7313 and then will further raise up to 0.7350. In H4 chart bearish shark pattern formation favors prospects of a bearish trend. Also to be noted dark cloud formation exerts the expectation of downtrend for the pair.