Good day forex traders.
Welcome to our weekly review of the AUD/USD currency pair. How was your trading week? Hope it was full of pips! Do always remember to trade safely and not risk excessively. Even a pip gained is still a profit!
In the previous AUD/USD forecast we noted that the bearish pressure was still present. The region of 0.72 would be a significant support and resistance region and thus required careful monitoring. We continued to observe the effect of the US and China trade war on the Australian dollar.
Looking at the AUD/USD weekly chart above we noted that the currency pair pushed below the region of 0.72. The bearish momentum has intensified. The major support ahead would be our bearish target of 0.7.
As the AUD/USD continued to tumble downwards, there is no reason to believe that a correction is due. From a technical point of view, it remains within the bearish channel between the lower and middle bollinger bands. We should rely on observable indications instead and avoid catching a falling knife.
It was reported that risk aversion was significant during the week. Risky assets such as emerging market equities were sold off in exchange for typical financial shelters such as the US dollar.
As investors dumped US bonds due to the forecast of increasing interest rates, this in return fueled concerns of a tightening of market conditions. This choking of easy money may lead to deficits for companies and hence the risk aversion.
The Australian Retail Sales came in as expected, providing little as a boost for the Australian dollar.
On the other hand, the US Non-Farm Payroll clocked worst than expected. Having said so it was still positive and this also brought down the unemployment rate to 3.7%. This rate was last seen many years ago. With this development, it was reported that many traders are mindful that this may hasten the US Federal Reserve plans to hike the interest rate.
Next week brings a number of significant releases for the US. These are the US producer price index and consumer price index.