Fundamental view:

The Australian dollar fell against the American dollar during the trading course of the week. US dollar outperformed other currencies with aggressive rate hike expectation from it, with the CME’s FedWatch tool showing a 96.5% probability of a 50 bps rate hike in May and a 85% chance of a 50 bps June lift-off. On the other hand, Money market futures odds of a 0.25 bps increase by the RBA sit at an 85% chance, though some analysts were expecting a 40-bps rate hike.

Broad-based US dollar strength remains a key theme this week as Investors move towards the safe haven USD for refugee in times of market uncertainty caused by supply chain contrains due to China’s lockdown and the Ukraine crisis.  China’s covid lockdowns extended into Beijing while the Shanghai-reopening hopes faltered on a fresh uptick in infections and Europe battled an energy crisis, in the face of the Russia-Ukraine war.

In this week, US CB Consumer Confidence Index on 26^th April and Australia CPI quarterly report on 27^th April favored the bullish trend whereas US Core Durable Goods Orders monthly report on 26^th April and RBA Private Sector Credit monthly report on 29^th April favored the bearish trend for the pair.

The major economic events deciding the movement of the pair in the next week are US ISM Manufacturing PMI at May 02, RBA Interest Rate Decision at May 03, Australia Retail Sales monthly report, US ADP Nonfarm Employment Change, US ISM Non-Manufacturing PMI, EIA Crude Oil Stocks Change, Fed Interest Rate Decision at May 04, RBA Monetary Policy Statement and Nonfarm Payrolls at May 06.  

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 2.78% lower than the previous week. Maintaining high at 0.7250 and low at 0.7054 showed a movement of 196 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 0.6992 proves to be unreliable support then the pair may fall further to 0.6925 and 0.6796 respectively whereas a solid breakout above 0.7188 will open a clear path upward to 0.7317 and then will further raise up to 0.7384. In H4 chart, if breakout of the channel pattern is to the downside then bearish expectation is favored. Also to be noted shooting star formation exerts the expectation of downtrend for the pair.