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AUD/USD Weekly Forecast 11 Jan 16

Good day readers.

How was your trading week? Hope you made some money from the forex trading.

In the previous AUD/USD forecast we noted that the currency pair was a doji. This is likely due to the low market activity. It continues to respect the support of the middle bollinger band.


Technical Analysis

Looking at the AUD/USD weekly chart above we note that the currency pair was bearish. The momentum was strong and it breached the lower bollinger band.

The AUD/USD is now testing the support of 0.6950. Should the currency pair continue to develop below the lower bollinger band, we may see further bearish momentum. A failure of the 0.6950 support may see the AUD/USD targeting the bearish target of 0.68.

A bullish return will need to overcome the lower bollinger band. It is now a possible resistance region.

Fundamental Analysis

I always mentioned that market developments in China will likely have an impact on Australia. This is due to the fact that China is Australia’s largest trading partner. If economic activity in China is affected, this translates to less trade for Australia.

China’s sell off experienced this week probably dampened the economic sentiment towards Australia. Adding on to this would be the low commodities prices. This is likely to contribute negatively to the outlook of the Australian economy.

In the United States, the US Non-Farm Payroll came out better than expected. I always mention that the job market is a crucial indication of the economy’s health. With a positive release, some investors may speculate on a tighter timeframe for the next interest rate hike.

Next week brings important economic releases such as Australia’s unemployment and US Retail Sales.

Trade safely.

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