Good day forex traders and readers.
Welcome to our weekly edition of the AUD/USD forecast review and I hope everyone is having a great forex trading performance as we ahead into the mid month.
In the previous AUD/USD forecast we noted that the currency pair remained suppressed due to the performance of the US economy snapping away at the appeal of the Australian dollar. We noted possible support and resistance levels based on our technical bollinger bands.
Looking at the AUD/USD daily chart above we note that the currency pair was initially bearish for the week until the last day whereby the bears gave up the progress made during the week. The AUD/USD is now at similar levels as the week before.
The bollinger bands are serving our technical analysis well as we note that the top band is functioning as a resistance of sorts. We will need to monitor the region of 0.9020 to see if it will hold. If it fails, we may see a bullish target of 0.9150.
Should the bears return, a bearish target of 0.8840 may be expected.
We had a mixed bag of economic releases for Australia but the retail sales came out better than expected. This will probably bring some relief to the negative sentiments but i expect more is needed as commodities prices such as gold and oil remain uncertain.
In the US the main economic event, the US Non-Farm Payroll came in worst than expected. While the job creations remain positive, it is much lower than expected. While it may be due to the cold weather, the disappointment remains an impact to the market sentiments as speculation of performance and US Federal Reserve tapering intensifies. A point to note is that while the unemployment rate dropped a fair bit, it is due to more of a reduction of people in the employment pool rather than an massive increase in employment. Hence the apparent lack of market reaction to it.
As the US dollar weakens due to this sentiment impact, I advise close monitoring next week to observe if the knee jerk reaction continues.