Fundamental view:

The Australian dollar has rallied against the American dollar during the week. The improved market mood acted as a tailwind for the Aussie. The reports that the Omicron variant might be less severe than feared helped in easing the worries about the continuous surge in new COVID-19 cases around the world and in turn, improved the market sentiment.

According to a Reuters poll of economists, The Reserve Bank of Australia (RBA) is expected to raise interest rates in early 2023, and possibly sooner, who brought forward their rate hike expectations for the second straight month. Against a backdrop of rising inflation in Australia, the RBA is now predicted to lift its cash rate from a record low 0.10% in the first quarter of 2023. On the other hand, the Hawkish Fed may put a cap on the AUD/USD bulls.

US 3-Month Bill Auction on 20^th December and US Core Durable Goods Orders monthly report on 23^rd December whereas on the other hand RBA Meeting Minutes on 21^st December,US Existing Home Sales on 22^nd and RBA Private Sector Credit monthly report on 23^rd December framed uptrend for the pair December.

The major economic events deciding the movement of the pair in the next week are US S&P/CS HPI Composite-20 yearly report at Dec 28, EIA Crude Oil Stocks Change, US Pending Home Sales monthly report at Dec 29, Initial Jobless Claims and MNI Chicago Business Barometer at Dec 30.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 0.39% higher than the previous week. Maintaining high at 0.7251 and low at 0.7082 showed a movement of 169 pips.

In the upcoming week we expect AUD/USD to show a bullish trend. The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 0.7285 may open a clean path towards 0.7352 and may take a way up to 0.7454. Should 0.7116 prove to be unreliable support, the AUDUSD may sink downwards 0.7014 and 0.6947 respectively. In H4 chart bullish flag pattern formation favors prospects of a bullish trend. Also to be noted Bullish engulfing formation exerts the expectation of uptrend for the pair.