Good day forex traders.
Welcome to our weekly review of the AUD/USD. I hoped the week was a great one for you with pips aplenty!
In the previous AUD/USD forecast we noted that the currency pair is reacting to the general risk appetite of the market. As China is a major trade partner, the Australian economy is inevitably affected by the US and China trade war.
Looking at the AUD/USD weekly chart above, we note that the week was a very bullish one. It tested the support and resistance region of 0.73 and had since eased below.
Despite the bullish climb, it is not indicative of a definitive change in trend. The price action is testing the upper limit of the bearish channel and the middle bollinger band remains above. We should monitor closely and drop down to shorter timeframes where necessary so as to be more responsive to changes.
From a sentimental point of view, the tariffs announced by both the US and China were less drastic than expected. The market responded with increased risk appetite, which is the reverse of risk aversion. The US dollar was likely sold in exchange for riskier currencies and assets.
In the RBA release, it was stated that while the interest rate will remain for now, any future move will likely to be an increase. This development probably increased the positive sentiment towards the Aussie dollar as traders are speculating a tightening of liquidity.
In the upcoming week, the US Federal Reserve will be releasing the latest interest rate decision. Many analysts are expecting an interest rate hike. Caution is advised in view of possible volatility. Proper money management should be practiced at all times.