AUD/USD Weekly Forecast 28 Jan 19


Good day forex traders.

Welcome to our weekly review of the AUD/USD. I have always mentioned that time flies and look! We are almost knocking on February’s doors.

In the previous AUD/USD forecast we noted that while the Australian dollar is not rallying in a sustained manner for now, the optimism surrounding the US – China trade war is providing some uplift. Further developments will continue to shape the path forward.

Technical Analysis

Looking at the AUD/USD weekly chart above we noted that the currency pair remains attracted to the middle bollinger band. It is slightly bullish but capped by 0.72 for now.

Possible Consolidation?

An interesting point of observation is that the bollinger bands are turning to a horizontal angle. This suggests that the price action may be morphing into a consolidation pattern. Close observation should be done.

Fundamental Analysis

The global sentiments for the equities markets is generally positive for the week. Hence typical risk taking activities were observed such as the demand for riskier currencies.

US Federal Reserve Cruises to a Stop

Comments were made regarding the US Feds plan to reduce their bonds holdings. It was suggested that the central bank will soon stop letting their bonds holdings mature without reinvestment. This probably lifted equities as it means that more US dollars will remain in the financial system. Having said that more US dollars means more supply and this usually leads to a lower value for the currency.

Australian Jobs Better Than Expected

The Australian employment data came in better than expected. 21600 jobs were created and the unemployment rate dropped to 5%. Employment is a fundamental influencer of the economy as people with money drive up consumer sales. This release probably brought positive sentiments to the market.

The Week Ahead

Among the various releases, there are two major ones which we should be mindful of. Members should log on to thier private dashboards for the economic calender.

The Australian Consumer Price Index is due midweek and as a fundamental economic indicator, it is likely to influence the AUD/USD.

We are also due for the US Federal Reserve FOMC meeting minutes this week. It is a detailed record of the FOMC’s most recent meeting. We should pay attention to this as it may give us insights into the central bank’s financial and economic views which resulted in their votes on the decision of interest rates. Any unexpected development is likely to result in increased volatility.

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