May 20th 2022: Pandemic Low of $1.0638 Eyed as Resistance on EUR/USD

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD Technical Analysis:

EUR/USD bulls entered an offensive phase on Thursday amidst broad USD softness. The US Dollar Index (USDX) plunged 1 per cent by the close of Europe, driven lower by US Treasury yields navigating south across the curve.

Evident from the weekly timeframe, EUR/USD buyers remain in the driving seat and are on track to form a textbook bullish engulfing candle ahead of 2nd January low at $1.0340 (2017). Overhead, Quasimodo support-turned resistance at $1.0778 is visible on the weekly scale, which if tested could be a reasonable platform for a ‘sell-on-rally’ theme, in a market decisively trending lower since 2021.

Lower on the curve, however, the daily timeframe reveals price is closing in on the underside of the pandemic low of $1.0638 (March 2020), a level that served as firm resistance at the beginning of May. Quasimodo support coming in at $1.0377 is seen to the downside, closely shadowed by a 1.272% Fibonacci projection at $1.0305. Adding to the daily timeframe’s technical landscape, the relative strength index (RSI) is seen closing in on the lower side of the 50.00 centreline.

Of technical relevance on the H4 timeframe, trendline resistance (taken from the high $1.1185) is now active, following an earlier retest of support at $1.0483. Overcoming the said trendline resistance shines light on H4 prime resistance at $1.0680-1.0640, which happens to reside 2 pips north of daily resistance mentioned above at $1.0638.

Analysis based on the H1 timeframe has price within reach of $1.06 after rebounding from nearby Quasimodo resistance-turned support at $1.0576. Upstream, H1 Quasimodo resistance can be seen as the next upside target at $1.0631, a base sharing chart space with daily resistance at $1.0638.

Technical Outlook:

Technical elements in this market show a clear downtrend present, with the daily RSI possibly testing 50.00 as resistance. This draws attention to the daily timeframe’s resistance at $1.0638, together with H1 Quasimodo resistance at $1.0631 and H4 prime resistance at $1.0680-1.0640 as a possible zone that sellers could emerge from.

AUD/USD Technical Analysis:

The Australian dollar outperformed against the US dollar on Thursday, adding 1.5 per cent and reclaiming Wednesday’s losses.

Price action on the weekly chart is threatening to engulf prime support at $0.6948-0.7242. This, in a market demonstrating a downside bias since early 2021, and daily action trading under its 200-day simple moving average at $0.7262 since 21st April, unearths weekly support at $0.6673 and a neighbouring 50.0% retracement at $0.6764.

Quasimodo support at $0.6901 on the daily timeframe remains in place. Upstream casts light on resistance at $0.7170, which happens to accommodate a 78.6% Fibonacci retracement at $0.7174 and a 38.2% Fibonacci retracement at $0.7149. Joining current resistances is the relative strength index (RSI); the indicator is poised to retest the lower side of the 50.00 centreline, following positive divergence ahead of support at 21.38.

Out of the H4 timeframe, movement is within range of trendline resistance, extended from the high $0.7661. Interestingly, just above this descending line resides the daily resistances. However, on the H1 timeframe, price is eyeballing $0.71 as possible resistance (joined by a 1.618% Fibonacci projection at $0.7088 and a 100% Fibonacci projection at $0.7122), which merges with current H4 trendline resistance.

Technical Outlook:

Despite recent buying, this remains a sellers’ market.

Immediate resistance is present around $0.71 (enclosed between H1 Fibonacci resistances at $0.7122-0.7088) on the H1, aided by H4 trendline resistance. Failure to attract sellers could unlock a whipsaw to daily resistances around $0.7170ish.

USD/JPY Technical Analysis:

Thursday watched the USD/JPY exchange rate refresh month-to-date lows, as markets largely continued to echo a risk-off tone.

Higher timeframe technical structure remains unchanged on the weekly and daily timeframes; here’s where the research team left the charts in Thursday’s technical briefing:

Buyers have been on the ropes since price action made contact with supply at ¥131.93-131.10 on the daily timeframe, in the shape of a shooting star candlestick pattern. The obvious downside objective resides at ¥125.54, a weekly resistance-turned support level. To the upside on the weekly scale, 28th January high (2002) is evident at ¥135.16.

Another key note on the daily scale is the relative strength index (RSI) departing from overbought territory and subsequently breaching a double-top pattern’s neckline stationed around the 66.93 31st March low (peaks were established from indicator resistance at 87.52). Familiar indicator support is now active at 40.00-50.00 (a temporary oversold zone since May 2021) which holds the double-top profit objective within at 45.93.

Focus remains directed towards the double-top formation at ¥131.26 on the H4 chart, displaying a neckline at ¥128.62 which, as you can see, ceded position on 12th May. Should Quasimodo support from ¥127.44 break, the pattern’s profit objective demands attention at ¥126.00, placed a touch north of the weekly support level underlined above at ¥125.54.

Elsewhere on the H1 timeframe, a near-test of Quasimodo support at ¥127.02 (and ¥127) materialised in recent trading, a move highlighting ¥128 and neighbouring supply at ¥128.35-128.12 (accompanied by a 50% retracement at ¥128.40 and a 61.8% Fibonacci retracement at ¥128.21).

Technical Outlook:

Scope to discover deeper water on weekly and daily timeframes, in addition to H4 price on the verge of dethroning Quasimodo support from ¥127.44, a test of H1 supply at ¥128.35-128.12 may be an area sellers draw to. Note that this zone is positioned directly above ¥128, therefore also marking the possibility of a ‘stop-run’.

GBP/USD Technical Analysis:

In spite of Wednesday’s deterioration, Thursday staged an impressive rebound and elevated GBP/USD higher by 1.3 per cent. Week to date, the currency pair is higher by 2 per cent, following last week’s pip-perfect test of Quasimodo support at $1.2164 on the weekly timeframe. However, it’s important to remain aware that this market has been entrenched within a strong downtrend since early 2021, emphasising weekly resistance at $1.2719 as a possible ceiling should price test this base.

The technical perspective on the daily timeframe has price bordering on the lower side of a bearish flag pattern formed in early May, made up between $1.2411 and $1.2614. Beyond here, a Quasimodo support-turned resistance is seen around $1.2762, whereas additional weakness draws attention to support from $1.2018.

In terms of the daily timeframe’s relative strength index (RSI), bullish divergence recently took hold with the indicator poised to retest the underside of the 50.00 centreline. Bear in mind, however, that the RSI can register oversold signals for extended periods in a downward facing market.

Coming from the H4 timeframe, resistance is likely on the radar at $1.2650 due to the level being accompanied by a 100% Fibonacci projection at $1.2683 and a 200% Fibonacci extension at $1.2677. Harmonic traders will acknowledge the 100% Fibonacci projection represents an AB=CD bearish formation. Key levels on the H1 timeframe right now, though, are supply at $1.2569-1.2541, followed by $1.26. Trendline support is visible to the downside, extended from the low $1.2156.

Technical Outlook:

The combination of the lower side of the daily bearish flag and H1 supply at $1.2569-1.2541 could be enough to tempt a technical bearish showing.

H1 trendline support is also likely to be of interest if price pulls lower, as both weekly and H4 timeframes demonstrate room to explore higher levels.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only.

To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

AUD/USD Price Forecast – The Australian Dollar Continues to Test Resistance

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar rallied during the trading session on Thursday to reach the 0.70 level. This is an area that has been important a couple of times, so it should not be surprising at all to see that the market is attracted to this level like a magnet. However, it should be noted that we are in a massive downtrend and therefore it also should not be much of a surprise to think that the market is struggling to stay above there.

With all of the “risk-off behavior” out there, it does make sense that the US dollar continues to be favored over the Aussie dollar. The Australian dollar is highly levered to commodities, so pay close attention to those as well. Nonetheless, we are in a downtrend and that is the most important thing to pay attention to. When we broke below the 0.70 level previously, it was a very negative turn of events and now it looks like the market is trying to follow through on that move.

Even if we were to rally from here, it would not be until we break above the 0.72 level that I would take any rally seriously, and I would also need to see the US dollar struggling against multiple other currencies. Because of this, it is more likely than not going to be a situation where we fade rallies going forward, taking advantage of “cheap dollars.” Regardless, the US dollar is by far the most favored currency right now, so it is difficult to go against it in this environment. I think that remains the case for some time.

AUD/USD Price Forecast Video 20.05.22

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Daily Forecast – Tight Australian Job Market Supports Rate Hike Expectations

The Australian and New Zealand Dollars are edging higher on Thursday on improving risk sentiment amid signs of an easing in Shanghai’s COVID lockdown, although investors remain nervous about the state of the global economy.

The Aussie is receiving additional support from a down tick in Australian unemployment to its lowest level in nearly 50 years. The Kiwi is mostly responding to the slight turnaround in sentiment.

At 06:45 GMT, the AUD/USD is trading .6976, up 0.0025 or +0.36%. The NZD/USD is at .6321, up 0.0026 or +0.42%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $68.97, down $0.52 or -0.74%.

Shanghai Eases COVID Restrictions in Some Areas

The COVID-19-hit financial hub of Shanghai will start to allow more businesses in zero-COVID areas to resume normal operations from the beginning of June, a deputy mayor said on Thursday as the city looks forward to the end of lockdown.

Shanghai, fighting China’s biggest ever coronavirus outbreak, has been steadily allowing more businesses to reopen and letting larger numbers of residents leave their homes for the first time in nearly seven weeks.

The city was “striving to achieve a full resumption of work and production as soon as possible”, deputy mayor Zhang Wei told a media briefing.

Dip in Australian Unemployment Rate Supports Rate Hikes

Figures from the Australian Bureau of Statistics (ABS) on Thursday showed Australia’s unemployment rate stood at its lowest level in almost 50 years in April as companies took on more full-time workers. This tightening in the labor market will increase pressure on the Reserve Bank of Australia (RBA) to raise interest rates.

According to the ABS, the Australian jobless rate held at 3.9% in April, from a downwardly revised 3.9% in March, matching market forecasts.

Employment missed the forecast with a rise of just 4,000, though that reflected a large 92,400 gain in full-time jobs being offset by an 88,400 drop in part-time work.

New Zealand First Quarter Producer Price Index Rises

New Zealand producer prices rose in the first quarter. Data from Statistics New Zealand showed on Thursday input prices up 3.6 percent and output prices up 2.6 percent.

Last week, the Reserve Bank of New Zealand’s (RBNZ) quarterly survey of expectations showed business managers forecast annual inflation at 4.88% over the coming year, from 4.4% in the previous survey.

Daily Forecast

The tightening of the Australian job market strongly suggests the RBA will lift interest rates again in June as it scrambles to contain a flare up of inflation to a 20-year high. Trader odds point toward a move to 0.60% at the June policy meeting.

Meanwhile, the RBNZ is widely expected to increase interest rates by half a percentage point at each of its next three policy meetings to get on top of surging inflation, according to Westpac Banking Corp.

The rate hikes combined with Shanghai’s easing of COVID restrictions seems to be enough to underpin the AUD/USD and NZD/USD on Thursday. However, gains are likely to be capped over the near-term because the Federal Reserve is expected to raise rates at a more aggressive pace.

For a look at all of today’s economic events, check out our economic calendar.

May 19th 2022: Technical View Indicates EUR, AUD, and GBP Weakness Ahead

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD Technical Analysis:

Demand for safe-haven bids materialised Wednesday amid sharp selling across European and US equities. The US dollar—measured by the US Dollar Index—also witnessed modest buying and longer-dated US Treasury yields jolted lower.

Europe’s single currency rotated south against its US counterpart, consequently trimming a portion of Tuesday’s 1.1 per cent advance. Technically, the currency pair is on the doorstep of 2nd January low at $1.0340 (2017) on the weekly timeframe, though trend direction remains on the side of sellers for the time being (dominant since the beginning of 2021). Adding to this, seen clearly from the monthly timeframe, the overall vibe has been to the downside since topping in April 2008.

Quasimodo support coming in at $1.0377 welcomed price action at the tail end of last week. Based on the daily timeframe, subsequent buying elevated the unit to the lower side of a daily bearish flag pattern, made up between $1.0471 and $1.0593. Overhead, the underside of the pandemic low of $1.0638 (March 2020) is also on the radar.

Against the backdrop of higher timeframes, the H4 chart reveals support at $1.0483 is being retested. Although H4 price action remains within a downtrend (most traders are likely watching the $1.0642 high to be engulfed [5th May] to confirm a potential uptrend), technicians may find interest in current support due to its position on the H1 scale.

Enclosed within a H1 decision point at $1.0470-1.0492, alongside a H1 trendline support, taken from the low $1.0349, these technical elements may be enough to trigger a bullish stance. What’s technically relevant is these areas are positioned below $1.05, promoting the possibility of a stop-run.

Technical Outlook:

Despite higher timeframes threatening further selling, the H1 decision point at $1.0470-1.0492 (together with H4 support at $1.0483 and H1 trendline support) might be sufficient to encourage a short-term bid back above $1.05.

AUD/USD Technical Analysis:

The Australian dollar fell against the US dollar on Wednesday, snapping a three-day winning streak after daily flow staged a rebound from Quasimodo support at $0.6901. Upstream on the daily chart casts light on resistance at $0.7170, which happens to accommodate a 78.6% Fibonacci retracement at $0.7174 and a 38.2% Fibonacci retracement at $0.7149.

Whether buyers have enough ‘oomph’ to reach the aforesaid resistances is difficult to estimate at this point. Discouraging further buying is the relative strength index (RSI); the indicator continues to explore space south of the 50.00 centreline (negative momentum). Indicator support also remains sketched in at 21.38.

In addition to the daily timeframe, price action on the weekly chart is threatening a break of prime support at $0.6948-0.7242. This, in a market demonstrating a downside bias and daily action trading under its 200-day simple moving average at $0.7263 since 21st April, unearths weekly support at $0.6673 and a neighbouring 50.0% retracement at $0.6764.

Recent hours on the H1 chart observed price tunnel through $0.70, movement shining light on trendline support, taken from the low $0.6829, and Quasimodo resistance-turned support at $0.6953, followed by a head and shoulders top profit objective at $0.6934.

Technical Outlook:

Chart studies suggest the H1 timeframe is likely to zero in on the head and shoulders top profit objective at $0.6934, with the possibility of also targeting $0.69 as it shares chart space with the daily timeframe’s Quasimodo support from $0.6901. As such, a short-term scene could unfold as we head into Thursday’s sessions.

USD/JPY Technical Analysis:

Demand for the safe-haven Japanese yen weighed on the USD/JPY currency pair Wednesday, guiding the unit lower by approximately 1 per cent. Buyers have been on the ropes since price action made contact with supply at ¥131.93-131.10 on the daily timeframe, in the shape of a shooting star candlestick pattern. The obvious downside objective resides at ¥125.54, a weekly resistance-turned support level. To the upside on the weekly scale, 28th January high (2002) is evident at ¥135.16.

Another key note on the daily scale is the relative strength index (RSI) departing from overbought territory and subsequently breaching a double-top pattern’s neckline stationed around the 66.93 31st March low (peaks were established from indicator resistance at 87.52). Familiar indicator support is now active at 40.00-50.00 (a temporary oversold zone since May 2021) which holds the double-top profit objective within at 45.93.

Across the page on the H4 timeframe, attention is on the recently formed double-top formation at ¥131.26, with a breached neckline plotted at ¥128.62. The pattern’s profit objective sits at ¥126.00, a touch north of the weekly support level underlined above at ¥125.54.

Analysis based on the H1 timeframe has buyers and sellers squaring off ahead of ¥128. Resistance demands attention at ¥128.45, sheltered under a decision point from ¥128.70-128.51. Should a break of ¥128 develop, aside from the ¥127.52 (12th May) low, limited support is seen until ¥127.

Technical Outlook:

A test of the H1 timeframe’s decision point at ¥128.70-128.51 could be movement that attracts bearish attention, in light of room to navigate lower on surrounding timeframes. Alternatively, H1 price dipping under ¥128 might encourage a bearish breakout scene, targeting at least the ¥127.52 (12th May) low.

GBP/USD Technical Analysis:

Sterling finished Wednesday on the back foot versus the US dollar after UK inflation clocked an eye-popping 9 per cent in April (y/y). Technically, price remains toying with Quasimodo support coming in at $1.2164 on the weekly timeframe, following April’s 4.3 per cent tumble. $1.2164 is a major technical level so a rebound—if only temporary—is likely anticipated by many traders. However, it’s important to remember that this market has remained entrenched within a strong downtrend since early 2021.

Meanwhile on the daily timeframe, GBP/USD snapped a three-day bullish phase ahead of the lower boundary of a bearish flag pattern formed in early May, made up between $1.2411 and $1.2614. Beyond here, a Quasimodo support-turned resistance is seen around $1.2762, whereas additional weakness draws attention to support from $1.2018.

In terms of the daily timeframe’s relative strength index (RSI), bullish divergence is currently in play with the indicator poised to retest the underside of the 50.00 centreline. Bear in mind, however, that the RSI can register oversold signals for extended periods in a downward facing market.

Across the page on the H4 timeframe, recent candle action shows price rejected Quasimodo support-turned resistance at $1.2476 (accompanied by a 61.8% Fibonacci retracement at $1.2457). An absence of obvious support is evident on the H4 chart until a Quasimodo formation at $1.2186. A closer reading of price action on the H1 chart has the pair making its way beneath $1.24, in the direction of support between $1.2287 and $1.2311 (made up of two Fibonacci ratios and the $1.23 figure).

Technical Outlook:

H1 support at $1.2287-1.2311 may interest short-term traders today. With that being said, a cautionary approach is likely to be adopted, as higher timeframes indicate sellers are in the driving seat for the time being. Consequently, traders might pursue additional confirmation before pulling the trigger at the aforementioned support area.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only.

To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

AUD/USD Price Forecast – The Australian Dollar Continues to Be Noisy

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has gone back and forth during the trading session on Wednesday as we continue to look at the 0.70 level like a magnet for price. That being said, it is worth noting that the last couple of candlesticks have been very bullish on the daily chart, so to take a bit of a breather would not be a huge surprise. However, it is worth noting that we are in a major downtrend and of course, the interest rates in the United States continue to rise. Furthermore, the market will continue to look at global risk as a potential problem for commodities, at least some of them. Copper has looked a bit vulnerable as of late, and that can have a bit of a “knock-on effect” on the Australian dollar as well.

Even if we do rise from here, the 0.72 level is the top of the noise just above, and the 50 Day EMA has popped into the picture. And therefore, I would be a seller of signs of exhaustion above here as well. Ultimately, I do not have any interest in trying to buy this pair until we break above the 0.72 level at the very least. Once we get above there, then I will reevaluate the entire situation, but I suspect this is probably more about the US dollar than anything else. The slowdown in China is probably weighing down the Aussie dollar as well, so when you put it all together and add the fact that Jerome Powell has suggested that the Federal Reserve could go “beyond neutral” with interest rates, it could be driving money back into the US dollar.

AUD/USD Price Forecast Video 19.05.22

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Forex Technical Analysis – Next Challenge is .7048 – .7099 Retracement Zone

The Australian Dollar is inching lower against its U.S. counter-part early Wednesday after highly-anticipated data on wages came out softer than expected, dampening calls for faster rate hikes and sending bond yields lower. Additionally, early buyers failed to clear a key resistance level despite closing on the high of a three-day rally the previous session.

At 05:31 GMT, the AUD/USD is trading .7024, down 0.0007 or -0.10%. The Invesco CurrencyShares Australian Dollar Trust ETF (FXA) is trading $69.46, up $0.41 or +0.59%.

After months of anticipation ahead of the wages report, the actual figures were a letdown. Wages rose only a modest 0.7% in the first quarter, nudging annual growth up a fraction to 2.4%. That was below the median forecasts of 2.5%.

Bullish traders were really hoping for a 2.7% or reading or higher. This would have pushed the Reserve Bank of Australia (RBA) to hike its benchmark interest rate by more than 25 basis points in June.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6829 will signal a resumption of the downtrend. A move through .7266 will change the main trend to up.

The minor trend is also down. A trade through .7053 will change the minor trend to up. This will shift the momentum.

The short-term range is .7266 to .6829. It retracement zone at .7048 to .7099 is resistance.

The minor range is .6829 to .7047. Its pivot at .6941 is the nearest downside target.

Daily Swing Chart Technical Forecast

Trader reaction to .7048 will likely determine the direction of the AUD/USD on Wednesday.

Bearish Scenario

A sustained move under .7047 will indicate the presence of sellers. If this move creates enough downside momentum then look for a pullback into the pivot at .6941.

Trader reaction to this level should determine the near-term direction of the AUD/USD. Counter-trend buyers are going to stop the price slide and form a secondary higher bottom, or sellers will continue to drive prices into at least .6829.

Bullish Scenario

A sustained move over .7047 will signal the presence of buyers. Taking out .7053 will change the minor trend to up and could create the upside momentum needed to challenge .7099, followed closely by .7144.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Breaks Through Round Figure

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has rallied during the trading session on Tuesday to break above the 0.70 level, showing signs of life yet again. That being said, the market is going to continue to be a bit noisy, but quite frankly it is difficult to imagine a scenario where the Aussie dollar simply takes off to the upside because quite frankly the US dollar is like a wrecking ball to almost everything at this point. Because of this, I believe that we have a situation where traders are going to come in and jump all over this market as it is most certainly negative. That being said, you also have to keep in mind on risk appetite in general.

If we break down below the 0.70 level, then it is likely that the market goes looking to the 0.6850 level, possibly even lower than that. A breakdown below the 0.68 level would be catastrophic for the Aussie, perhaps sending the market much lower. Rallies at this point in time continue to be looked at with suspicion, and therefore I think it is probably only a matter of time before they get faded. In fact, it is not until we break above the 0.72 level that I would take any rally seriously.

The market continues to be very noisy but still favors the greenback as there are so many concerns around the world currently. I think that continues to be the case, and therefore I still think that the US dollar is king, and will remain so for the foreseeable future. Commodity markets of course are heavily influenced by the Aussie as well, but I look at this as a bit of a relief rally more than anything else.

AUD/USD Price Forecast Video 18.05.22

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Forex Technical Analysis – Weak US Retail Sales Could Spike Aussie into .7048 – .7099

The Australian Dollar is edging higher early Tuesday after Australia’s central bank signaled another rate hike was likely at its June policy meeting. The move also shows traders are shrugging off bearish economic news from China, indicating oversold conditions.

At 06:05 GMT, the AUD/USD is trading .7006, up 0.0037 or +0.53%. On Monday, the Invesco CurrencyShares Australian Dollar Trust settled at $68.98, up $0.35 or +0.51%.

RBA Minutes Give Aussie Surprise Boost

Besides the technical short-covering, the Aussie is getting help from minutes of the Reserve Bank of Australia’s (RBA) last policy meeting, which dropped a heavy hint that another rate rise was coming in June.

June financial futures dipped to fully price in a quarter-point hike to 0.60% on June 7, and have rates reaching 1.35% by August following inflation data for the second quarter.

Looking Ahead…

Aussie traders are now gearing up for Wednesday’s all important wage data figures, which will offer clues on the pace of wage inflation. Traders expect the data to show annual growth picking up to 2.5%. Additionally, jobs data for May on Thursday could show unemployment falling under 4.0% for the first time since the early 1970s.

In the U.S., traders are waiting for the release of April’s retail sales report and others including industrial production. Bearish retail sales numbers could weaken the case for an aggressive Fed. This news would put pressure on the U.S. Dollar, leading to more short-covering in the Australian Dollar.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6829 will signal a resumption of the downtrend. A move through .7266 will change the main trend to up.

The minor trend is also down. A trade through .7053 will change the minor trend to up. This will shift momentum to the upside.

The minor range is .7053 to .6829. Its pivot at .6941 is new support.

The short-term range is .7266 to .6829. Its retracement zone at .7048 to .7999 is the next upside target. This is followed by additional resistance at .7144 to .7218.

Daily Swing Chart Technical Forecast

Trader reaction to .6941 will likely determine the direction of the AUD/USD on Tuesday.

Bullish Scenario

A sustained move over .6941 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the resistance cluster at .7048 – .7053. Sellers could come in on the first test of this area, but if it fails, prices could spike into .7099.

Bearish Scenario

A sustained move under .6941 will signal the return of sellers. This could lead to a near-term test of the main bottom at .6829, followed by long-term bottoms at .6811 and .6777.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – The Australian Dollar Continues to See a Lot of Volatility

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has gone back and forth during the trading session on Monday as we continue to see a lot of volatility throughout the marketplace, not only in the Australian dollar but pretty much everything else as well. Ultimately, the 0.70 level above will continue to be a major resistance barrier, as it is a large, round, psychologically significant figure, and an area that will cause some headline noise as well.

Keep in mind that the US dollar is very strong in general, so it does make a certain amount of sense that the Aussie will suffer. Furthermore, the Australian dollar is highly tied to the commodity markets, which will be under a certain amount of pressure due to the question of global growth. If we are going to enter some type of recession globally, that will have a major impact on what we may see for demand. If that is going to be the case, the market is more likely than not going to continue to see a lot of noisy behavior, but even if we were to break above the 0.70 level, I believe that there are plenty of resistance areas above. In fact, it is not until we break above the 0.72 level that I would take a rally seriously.

It would obviously have to do with some type of major shift in either risk appetite or perhaps the Federal Reserve and its attitude. That does not look very likely to happen anytime soon, so it is more likely than not set this market up for a “fade the rallies” type of situation.

AUD/USD Price Forecast Video 17.05.22

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Forex Technical Analysis – Trader Reaction to .6941 Pivot Sets the Tone

The Australian Dollar is edging lower on Monday after an early rally fizzled following the release of weak economic data out of China. The news raised concerns over a global recession, pressuring the higher-risk currency.

Chinese retail sales sank 11.1% in April from a year earlier, far beyond forecasts of a 6.1% drop and testimony to how tough coronavirus lockdowns have been there. Additionally, industrial output also fell a steep 2.9% on the year, in a grim omen for resource demand.

The Asian giant is Australia’s biggest export market and the Aussie is often used as a liquid proxy for the Yuan, according to Reuters.

At 08:23 GMT, the AUD/USD is trading .6917, down 0.0021 or -0.30%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $68.59, up $0.67 or +0.98%.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6829 will signal a resumption of the downtrend. A move through .7266 will change the main trend to up.

The minor trend is also down. A new minor bottom at .6829 was confirmed overnight. A trade through .7053 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is .7053 to .6829. The AUD/USD is currently straddling its pivot at .6941.

The second minor range is .7266 to .6829. Its retracement zone at .7048 to .7099 is the next upside target and potential resistance.

Daily Swing Chart Technical Forecast

The early price action indicates the direction of the AUD/USD on Monday will be determined by trader reaction to the pivot at .6941. ‘

Bullish Scenario

A sustained move under .6941 will indicate the presence of sellers. The first downside target is a minor level at .6894. This is the last potential support before the minor bottom at .6829, and a pair of long-term bottoms at .6811 and .6777.

Bearish Scenario

A sustained move over .6941 will signal the presence of counter-trend buyers. If this creates enough upside momentum then look for a near-term surge into the resistance cluster at .7048 to .7053.

For a look at all of today’s economic events, check out our economic calendar.

Equites Remain Buoyant, China Stimulus , Oil Breaks Out , Gold Digs In +FX ( CNH-AUD-GBP)

Global Macro and Stock Markets Analysis

After dipping in and out of the red last week, worrying that the Fed’s inflation targeting could bring about a recession, equity markets ended the week in a relief rally fashion, led by tech and other oversold sectors, after Chair Powell hinted that the Fed would not look to shock the markets with 75 bp rate hikes at the next two meetings. And expectations continue to increase for a sizeable policy response from Chinese authorities ahead of a gnarly set of April data this week. This expectation is acting as a tailwind to sentiment.

Chair Powell’s appearance Tuesday at a WSJ event will attract some attention – but the data docket will do most of the talking this week with all eyes on US retail sales.

Indeed, investors remain laser-focused on the macro picture, particularly on consumer-based recessionary guidepost.

Still, the 2000 Tech-Bubble Crash analog would suggest the market has reached a comparable point of repricing and is possibly attracting dip buyers. But that does not mean the bear market is over, especially with the recession on everyone’s mind. I do not think that mortal coil passes quickly with traders looking to sniff out any signs of economic slowdown like a heat-seeking missile.

And while investment returns should be weaker in this cycle and without complicating the matter, higher interest rates imply smaller contributions to valuation. But looking at the post-pandemic market purely through the binary lens of Growth versus Value is becoming less relevant; investors will be driven by a different set of macro conditions and priorities than in the past, implying they will use different investment styles just like they did coming out of the 2000 tech crash.

Still, I do not think this is an excellent climate for investors as the market continues to trade on very short-term recessionary signals. And it is very “noisy,” keeping intraday volatility high with 150–250-point swings is common. Indeed, this is the hallmark of a market filled with air pockets which have left more than a few investors licking their wounds.

And while we have not reached that “sell everything “capitulation point, I do not think you want to be on the wrong side of the handshake line on this call.

Oil Fundamental Analysis

Crude oil finished the week at the highest since March 25 as the market seemed more spooked by Russia turning off power flows into Finland, b, and that domino effect than the chatter of a Beijing lockdown.

The Covid situation in mainland China remains fluid, although expectations continue to increase for a sizeable policy response from the authorities ahead of April data this week. Just as Americans are gearing up for summer road trips (summer driving season), any China policy response is a boon for the bulls. Indeed, US gasoline futures contract climbed to its highest level on record, signalling more pain at the pump for US consumers and higher inflation, mind you, which should now fall under the FOMC’s watchful eye while trying to snuff out the inflation fires.

Oil sentiment turned bullish on Friday, possibly related to more positive steps suggested by the National Health Commission in incrementally opening up China’s economy within the country’s zero-covid framework.

Suppose China opens its major cities – even gradually – that increases the prospects for policy easing. China’s official institutions have been reluctant to enact a significant stimulus, with a locked-down economy not giving policymakers bang for their buck via the multiplier effect.

Gold Fundamental Analysis

Bonds started to go like equities last year, with value versus growth chopping around almost intraday. It is the same thing in rates with breakevens and reals. A massive gain in real rates has sent gold lower. Still, bullion is hanging on as the missing ingredient to send gold crashing through $1780 is an associated and significant decline in inflation expectations. Still, downward pressure is likely to linger in the near term, particularly if Chair Powell maintains a hawkish tone this week; however, gold could find a respite if US economic data turns sour.

FOREX Fundamental Analysis

Chinese Yuan CNH

On Friday, there is bullish sentiment in China’s equities and CNH, particularly related to more positive steps suggested by the National Health Commission in incrementally opening up the economy within the country’s zero-covid framework. In addition, the policy overseers took to the airwave with “China CBIRC warns against betting on one-way yuan move.” Being an official agency of the PBoC, traders will take notice of these smoothing efforts. I suspect

Australian Dollar

While China’s stimulus this week could support the AUD, the big fear is China leaving the door open to on and off lockdowns and giving less scope to the monetary and fiscal policy upon the reopening. The significant risk is Beijing’s lockdown, which veers the market back to recession risk.

Any recessionary repricing will trigger AUDJPY selling again, which is typically viewed as the G-10 go-to hedge when the sum of all fears hits.

British Pound

I think GBP could garner a lot of G-10 focus this week, and for all the wrong reasons, notwithstanding, the UK government is seemingly intent on adjusting the Northern Ireland protocol. Bond traders react to the BoE, sending more precise signals that it may soon approach its terminal rate as the UK economy heads toward a potential recession. Hence the UK yield curve had a massive and largely idiosyncratic repricing last week, where the belly has rallied a lot more than elsewhere.

AUD/USD Forex Technical Analysis – Early Breakout Over .6941 Puts .7048 – .7099 on Radar

The Australian Dollar advanced against the U.S. Dollar on Friday amid rising risk appetite, as soothing comments from Federal Reserve Chairman Jerome Powell helped ease concerns about more aggressive interest rate hikes to contain inflation.

On Friday, the AUD/USD settled at .6938, up 0.0084 or 1.23%. The Invesco CurrencyShares Australian Dollar Trust ETF (FXA) finished at $68.59, up $0.67 or +0.98%.

In an interview with Marketplace on Thursday, Powell reiterated that the central bank is prepared to raise interest rates by a half point at the coming meetings in June and July. Additionally, the Fed chief stressed that a 75 basis point increase was not in the cards.

Powell also acknowledged that the central bank is “prepared to do less,” if factors come in better than expected. The Fed’s goal is to get inflation back down to 2 percent without falling into a recession, Powell added.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6829 will signal a resumption of the downtrend. A move through .7266 will change the main trend to up.

The minor trend is also down. A trade through .7053 will change the minor trend to up. This will shift momentum to the upside.

The AUD/USD also posted an inside move on Friday which tends to suggest investor indecision and impending volatility. It could also be indicating a transition from bearish to short-term bullish.

The minor range is .7053 to .6829. Its 50% level or pivot at .6941 is resistance. It stopped the rally on Friday.

The second minor range is .7266 to .6829. Its retracement zone at .7048 to .7099 is the next resistance area.

Daily Swing Chart Technical Forecast

Trader reaction to .6941 is likely to determined the direction of the AUD/USD early Monday.

Bullish Scenario

A sustained move over .6941 will indicate the presence of buyers. If this is able to generate enough upside momentum then look for the buying to possibly accelerate into a resistance cluster at .7048 – .7053. Following this cluster is Fibonacci resistance at .7099.

Bearish Scenario

A sustained move under .6941 will signal the presence of sellers. This could create the negative momentum needed to challenge last week’s low at .6829, followed by a pair of main bottoms from June 2020 at .6811 and .6777.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – Central Banks Back in Focus Amidst Recession Fears

On the Macro

It is a busy week ahead on the economic calendar, with stats 59 due out through the week ending May 20. In the week prior, 45 stats were in focus.

For the Dollar:

It is a relatively busy week ahead.

On Tuesday, retail sales will be the area of focus ahead of jobless claims and Philly Fed manufacturing numbers on Thursday.

While the numbers will influence, Fed Chair Powell and FOMC member chatter will be the key in the week. The markets will be looking for Fed Chair Powell to back up comments from Friday and for members to align with his assurances.

On Friday, the Fed Chair assured the markets that larger rate hikes were off the table.

In the week ending May 13, 2022, the Dollar Spot Index rose by 0.87% to end the week at 104.563. In the week prior, the Index rose by 0.68% to 103.660.

For the EUR:

It is a quiet week ahead.

Eurozone trade and GDP numbers are due out ahead of finalized inflation figures on Wednesday.

Expect any revisions from the first estimate GDP and any upward revisions to prelim inflation figures to draw interest.

On Friday, flash consumer confidence figures for the Eurozone will wrap things up.

From the EU, the Economic Forecasts are due out on Monday and will likely have a greater impact than the numbers, however.

On the monetary policy front, ECB President Lagarde is due to speak on Tuesday, with the policy meeting minutes due out on Thursday.

For the week, the EUR slid by 1.32% to $1.0412. In the previous week, the EUR rose by 0.06% to $1.0551.

For the Pound:

It is a busy week ahead.

On Tuesday, claimant counts and the UK unemployment rate will draw interest ahead of inflation figures on Wednesday.

On Friday, retail sales numbers wrap things up. The stats will give the markets an idea of the impact of inflation on spending and whether the Bank of England needs to take a more hawkish stance to curb inflation.

From the BoE, the monetary policy report hearings will influence on Monday.

In the week, the Pound fell by 0.70% to end the week at $1.2262. The Pound tumbled by 1.79% to $1.2348 in the week prior.

For the Loonie:

Inflation will be the area of focus. On Wednesday, April’s figures are due out and will provide the Loonie with direction.

Other stats in the week include wholesale sales and RMPI numbers that will have less impact.

From the Asia Pacific

For the Aussie Dollar:

Wage growth will be in the spotlight on Wednesday ahead of employment numbers on Thursday.

While wage growth is an RBA consideration, employment figures will need to be positive to support a more hawkish RBA.

From the RBA, the meeting minutes are due out on Tuesday and will provide direction.

In the week, the Aussie Dollar slid by 1.92% to $0.6940.

For the Kiwi Dollar:

Wholesale inflation figures for the first quarter are out ahead of trade data on Friday.

With little else to consider, both sets of numbers will influence. However, China and sentiment towards the global economic outlook will remain the key drivers.

The Kiwi Dollar tumbled by 2.09% to end the week at $0.6276.

For the Japanese Yen:

First quarter GDP numbers will draw plenty of interest on Wednesday ahead of trade data on Thursday.

The Bank of Japan painted a grim picture at the last policy meeting, highlighting downside risks stemming from China and the war in Ukraine.

This week’s stats will give a sense of how bad it could be.

At the end of the week, April inflation figures are also due out. Barring a spike, however, we don’t expect too much influence on the Yen.

The Japanese Yen rose by 1.03% to end the week at ¥129.22 against the dollar. In the week prior, the Yen ended the week down by 0.66% to ¥130.56.

Out of China

Fixed asset investments, industrial production, and retail sales figures are out on Monday.

Expect plenty of interest in the numbers as the markets look to assess the impact of lockdown measures on economic activity.

While the government has promised support, we can expect market sensitivity to the numbers.

On the policy front, the PBoC will set loan prime rates on Friday, with any cuts to support riskier assets. Forecasts are for the PBoC to leave the LPRs unchanged.

Away from the economic calendar, COVID-19 news updates and chatter from Beijing will also influence.

In the week ending May 13, the Chinese Yuan slid by 1.84% to CNY6.7893. The Yuan declined by 0.88% to CNY6.6667 in the week prior.

Geo-Politics

Russia and Ukraine will remain the area of focus in the week ahead.

The Weekly Wrap – Fed Chair Powell Delivered Friday Comfort

The Stats

It was a quiet week on the economic calendar for the week ending May 13, 2022.

A total of 45 stats were monitored, following 62 stats in the week prior.

Of the 45 stats, 20 beat forecasts, with 22 economic indicators falling short of forecast. Three stats were in line with forecasts.

Looking at the numbers, 13 of the stats reflected an upward trend. Of the remaining 32 stats, 30 stats were weaker.

Out of the US

Inflation was back in focus, which caused market turbulence mid-week.

In April, the annual rate of inflation softened from 8.5% to 8.3% versus a forecasted 8.1%. The core annual rate of inflation softened from 6.5% to 6.2%. While softer, inflation was stronger than anticipated, supporting the more hawkish sentiment towards Fed monetary policy.

On Thursday, wholesale inflation also drew attention. In the month of April, the core producer price index increased by 0.4% after a 1.2% rise in March.

Initial jobless claims had a muted impact despite a rise from 202k to 203k in the week ending May-06.

On the monetary policy front, Fed Chair Powell calmed the markets on Friday, assuring that larger rate hikes remained off the table.

In the week ending May 13, 2022, the Dollar Spot Index rose by 0.87% to end the week at 104.563. In the week prior, the Index rose by 0.68% to 103.660.

Out of the UK

GDP and production figures were the main areas of focus in the week.

The stats were Pound negative, with the UK economy contracting in March and production hitting reverse.

In the first quarter, the UK economy grew by 0.8% quarter-on-quarter versus a forecasted 1.00%. The economy expanded by 1.3% in the previous quarter.

Year-on-year, the economy grew by 8.7% versus a forecasted 9.0%. The economy expanded by 6.6% in the fourth quarter of last year. More significantly, the economy contracted by 0.1% in March, after no growth in February.

Production figures also provided little comfort.

 

Production fell by 0.2%, partially offset by construction (+1.7%), with manufacturing production declining by 0.2%.

In the week, the Pound fell by 0.70% to end the week at $1.2262. The Pound tumbled by 1.79% to $1.2348 in the week prior.

The FTSE100 ended the week up 0.41%, partially reversing a 2.08% loss from the previous week.

Out of the Eurozone

ZEW Economic Sentiment figures for Germany and the Eurozone and Eurozone industrial production figures were the key stats.

In May, economic sentiment improved, with Germany’s ZEW Economic Sentiment Index up from -41.0 to -34.3. The Eurozone’s ZEW Economic Sentiment Index climbed from -43.0 to -29.5.

At the end of the week, industrial production disappointed, however.

In March, industrial production fell by 1.8% to test EUR support. Production rose by a modest 0.5% in February.

For the week, the EUR slid by 1.32% to $1.0412. In the previous week, the EUR rose by 0.06% to $1.0551.

The DAX rallied by 2.59%, with the EuroStoxx600 and the CAC40 seeing gains of 0.83% and 1.67%, respectively.

 

For the Loonie

It was a quiet week on the economic data front, leaving the Loonie in the hands of market risk sentiment.

In the week ending May 13, the Loonie fell by 0.42 to C$1.2929 against the greenback. The Loonie slipped by 0.21% to C$1.2875 in the week prior.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar slid by 1.92% to $0.6940, with the Kiwi Dollar tumbling by 2.09% to end the week at $0.6276.

For the Aussie Dollar

Business and consumer confidence numbers disappointed.

In April, the NAB Business Confidence Index fell from 16 to 10. The Westpac Consumer Sentiment Index fell by 5.6% in May, following a 0.90% decline in April.

For the Kiwi Dollar

Electronic card retail sales reversed a 1.3% decline with a 7.0% jump in April. The Business PMI disappointed, however, falling from 53.8 to 51.2.

For the Japanese Yen

Service sector PMI and household spending drew market interest in a quiet week on the data front.

In April, Japan’s services PMI rose from 49.4 to 50.7, up from a prelim 50.5. Service sector activity picked up in response to the government removing remaining COVID-19 restrictions.

Household spending figures disappointed, however. In March, spending slid by 4.1%, following a 2.8% decline in February.

The Japanese Yen rose by 1.03% to end the week at ¥129.22 against the dollar. In the week prior, the Yen ended the week down by 0.66% to ¥130.56.

Out of China

Trade and inflation tested investor appetite for riskier assets.

In April, exports increased by 3.9%, year-on-year, versus a forecasted 3.2% rise. Exports were up 14.7% in March.

The US dollar trade surplus widened from $47.38bn to $51.12bn as imports stalled.

Inflationary pressures picked up in April, with the annual rate of inflation accelerating from 1.5% to 2.1%.

In the week ending May 13, the Chinese Yuan slid by 1.84% to CNY6.7893. The Yuan declined by 0.88% to CNY6.6667 in the week prior.

The Hang Seng Index ended the week down 0.52%, while the CSI300 rose by 2.04%.

AUD/USD Forex Technical Analysis – Late Session Short-Covering Rally Fueled by Improving Risk Appetite

The Australian Dollar is trading higher late Friday as risk appetite improved. Nonetheless, it’s still poised to finish sharply lower for the week. The technical bounce in the market suggests it was fueled by short-covering and position-squaring since it began following a test of a nearly two-year low.

While over the short-term, the AUD/USD may be ripe for a counter-trend rally, the long-term picture is still bearish due to the divergence in monetary policies between the U.S. Federal Reserve and the Reserve Bank of Australia (RBA).

Simply stated, the Fed is poised to make consecutive 50-basis-point rate hikes in June and July, following its first in 20-years in May. Meanwhile, the RBA is only considering modest 25-basis-point rate hikes in its effort to tame inflation.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6829 will signal a resumption of the downtrend. A move though .7266 changes the main trend to up.

The minor trend is also down. A trade through .7053 will change the minor trend to up. This will shift momentum to the upside.

The first minor range is .7053 to .6829. Its 50% level or pivot at .6941 is the first upside target.

The second minor range is .7266 to .6829. Its retracement zone at .7048 to .7099 is the next potential upside target area.

Short-Term Outlook

The direction of the AUD/USD into the close on Friday is likely to be determined by trader reaction to .6941.

Bullish Scenario

Taking out .6941 late in the session on Friday will indicate the short-covering is getting stronger. If this move creates enough upside momentum then look for a possible surge into the resistance cluster formed by the 50% level at .7048 and the minor top at .7053.

Bearish Scenario

The inability to overcome .6941 late Friday will confirm that the early rally was fueled by short-covering. If it triggers an intraday break then this would suggests the AUD/USD still needs time to form a support base before moving higher.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Weekly Price Forecast – Australian Dollar Breaks Through a Major Support Level

Australian Dollar vs US Dollar Weekly Technical Analysis

The Australian dollar has broken significantly below the 0.70 level to show just how weak the currency is. The US dollar is like a wrecking ball for almost everything out there, and the fact that we formed an inverted hammer for the previous week suggests that we were always going to fall. Rallies at this point will more likely than not be sold into, based on what we have seen over the last several weeks. The 0.70 level should be a bit of a barrier that is going to be difficult to get above. However, if we were to break above there, then there should be plenty of sellers just waiting to get involved.

On the other hand, if we break down below the 0.68 level, then we could drop rather significantly at that point to go down to the 0.65 handle. The 0.65 handle is an area that is very important from a longer-term standpoint, and of course, it is a large, round, psychologically significant figure. The Australian dollar is highly correlated to commodities, so do not be surprised at all to see this market get hammered as there are a lot of concerns about global growth now. If the global economy is going to slow down, the Australian dollar will be one of the first places that will run from.

All things being equal, this is a market that I will be looking to fade and have no interest in buying until we break above the top of the inverted hammer from the previous week. Looking at this chart, nothing looks positive.

AUD/USD Price Forecast Video 16.05.22

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – The Australian Dollar Attempting to Recover on Friday

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has rallied just a bit during the trading session on Friday to recover some of the losses from the nasty Thursday session. That being said, there is still a lot of resistance above, with the 0.70 level offering significant resistance. The 0.70 level is a large, round, psychologically significant figure that people will be paying attention to, but I think the best thing you can do is “fade the rally.”

Keep in mind that the US dollar is strong for a reason, not the least of which will be higher interest rates in the United States. As the Federal Reserve continues to look very hawkish and likely to tighten going forward. Ultimately, this is a market that is a bit oversold, so it would make a certain amount of sense that we would show a bounce heading into selling pressure yet again. In fact, I do not have a scenario in which I am willing to buy the Aussie dollar, because quite frankly it is tied to commodities, which will be a difficult place to be as the global economy is starting to slow down.

If we break down below the lows, then I think we simply drop to the 0.68 level, which is an area that I have been talking about in the past. The market breaking down below there could open up a trapdoor effect and send the Aussie down to drastic lows. That being said, markets do not go in one direction forever, so it is likely that the bounce is necessary in order to offer value in the greenback.

AUD/USD Price Forecast Video 16.05.22

For a look at all of today’s economic events, check out our economic calendar.

Forex, Gold and Indices – Usual Friday Correction

Major Financial Markets Technical Analysis

USDJPY overnight corrects the 50% of the most recent downswing.

GBPJPY also slightly corrects the recent slide and tests the major horizontal resistance.

It’s also correction day for the SP500 and Nasdaq.

DAX, German Index is doing much better than its American peers. The weak Euro is to blame, which is helping German exporters.

EURUSD joins the correction party as well. 1.05 on the horizon.

Gold breaks a major, long-term up trendline.

AUDUSD breaks the long-term, horizontal support on the 0.7. That’s pretty negative.

EURCHF drops to test a combination of three crucial supports, the down trendline, a horizontal one and the upper line of the symmetric triangle.

GBPAUD with a massive double bottom formation. The price is close to a neckline, so a breakout here would be a major buy signal.

Traders Edge: Market Briefing Video 13.05.22

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Forex Technical Analysis – Profit-Taking Ahead of Weekend, Fueling Short-Covering Rally

The Australian Dollar is rebounding against the U.S. Dollar on Friday after touching a nearly two-year low the previous session. Nonetheless, the Aussie is still in a position to finish the week with a steep loss as growth forecasts for China were downgraded and the Yuan extended its decline.

At 06:38 GMT, the AUD/USD is trading .6887, up 0.0033 or +0.48%. On Thursday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $67.89, down $0.80 or -1.17%.

One reason for the weakness was China’s decision to limit unnecessary travel outside the country by its citizens, part of a drastic COVID-19 response that has hammered prices for industrial commodities.

In response to the prolonged lockdowns in China, JPMorgan this week slashed its China growth forecasts and now sees GDP contracting by an annualized 1.5% in the current quarter. It also warned data on retail sales and industrial production due on Monday would show hefty falls.

Meanwhile, the gloomy outlook has caused a month-long decline in the Yuan and encouraged investors to sell the Aussie as a liquid proxy.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6829 will signal a resumption of the downtrend, while a move through the June 22, 2020 main bottom will reaffirm the trend. Taking out the main top at .7266 will change the main trend to up.

The minor trend is also down. A trade through .7053 will change the minor trend to up. This will shift momentum to the upside.

The minor range is .7053 to .6829. Its pivot at .6941 is the first upside target.

Another minor range is .7266 to .6829. Its retracement zone at .7048 to .7099 is another potential upside target.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Friday is likely to be determined by trader reaction to .6891.

Bearish Scenario

A sustained move under .6891 will indicate the presence of sellers. If this creates enough downside momentum then look for a retest of .6829.

Taking out .6829 will indicate the selling pressure is getting stronger with the next potential targets .6811 and .6777.

Bullish Scenario

A sustained move over .6891 will signal the presence of counter-trend buyers. If this generates enough upside momentum then look for a surge into the minor pivot at .6941. This is a potential trigger point for an acceleration into .7048.

For a look at all of today’s economic events, check out our economic calendar.

May 13th 2022: AUD/USD Eyes $0.68 Amid Absence of Support

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD Technical Analysis:

Amidst broad dollar enthusiasm, Thursday watched EUR/USD extend lower and erase 1.4 per cent into the European close. Technicians adopting a multi-timeframe view are unlikely surprised by recent events. Weekly Quasimodo supports at $1.0467 and $1.0517 failed to spark bullish interest and subsequently gave way yesterday. Territory beneath the aforesaid barriers shine light on 2nd January low at $1.0340 (2017), pinned a touch under the daily timeframe’s Quasimodo support at $1.0377 which is currently active.

Of technical relevance on the daily chart is the bearish flag pattern, made up between $1.0471 and $1.0593. Thursday’s down move welcomed a breakout of the noted pattern, which led the currency pair to daily Quasimodo support (see above), a base closely shadowed by a 1.272% Fibonacci projection at $1.0305. Interestingly, pattern traders have likely pencilled in the bearish flag’s profit objective within striking distance of parity ($1.0000).

Readings out of the daily timeframe’s relative strength index (RSI) reveals the value stepped back into oversold territory after failing to find acceptance north of 38.70. Do remain aware that this indicator can remain oversold for prolonged periods in downtrends.

Quasimodo support on the H4 timeframe at $1.0351 is within reach of welcoming price action, following a decisive one-sided decline through H4 support from $1.0483 (now a marked resistance). Heading into US hours on the H1 timeframe, we can see the currency rebounded from $1.04 and tagged the lower side of a decision point at $1.0444-1.0426, consequently weighing on efforts to hold $1.04. With the aforementioned level ultimately giving way, $1.03 is an obvious support target on the H1 scale.

Technical Outlook:

Despite considerable losses in this market, notable support is on the radar between 2nd January low at $1.0340 (2017) on the weekly timeframe, the H4 Quasimodo support from $1.0351, and daily Quasimodo support at $1.0377. With this in mind, a TEMPORARY recovery effort could be seen in the coming days.

AUD/USD Technical Analysis:

The Australian dollar continued its slump against the US dollar on Thursday, firmly cementing position beneath weekly prime support at $0.6948-0.7242. This unearths weekly support at $0.6673 and a neighbouring 50.0% retracement at $0.6764.

In a market demonstrating a downside bias, with price action also trading south of its 200-day simple moving average at $0.7271, daily flow engulfed Quasimodo support at $0.6901 on Thursday and potentially set the technical stage for an approach towards daily support at $0.6678 (plotted nearby weekly support mentioned above at $0.6673).

According to the relative strength index (RSI) on the daily scale, the indicator is shaking hands with oversold levels after failing to shake hands with the underside of the 50.00 centreline. Indicator support also remains sketched in at 21.38.

Against the backdrop of higher timeframe action, H4 Quasimodo support is seen nearby at $0.6801 after price retested the lower side of H4 resistance at $0.6891. Joining the H4 Quasimodo support is the $0.68 figure on the H1 timeframe, clearly seen following a retest of the recently breached daily Quasimodo support.

Technical Outlook:

Following on from yesterday’s bearish episode, additional losses are potentially in the offing as all four timeframes analysed demonstrate scope to navigate lower levels until at least $0.68.

USD/JPY Technical Analysis:

The clear risk-off environment triggered demand for the safe-haven Japanese yen on Thursday and witnessed a sharp decline in USD/JPY. On track to snap a nine-week bullish phase, weekly price is poised to establish a bearish outside reversal on the weekly timeframe which could draw the unit to weekly support at ¥125.54. To the upside on the weekly scale, 28th January high (2002) is evident at ¥135.16.

Supply on the daily timeframe from ¥131.93-131.10 has served well as a technical ceiling, following Monday’s shooting star candlestick formation. Continuation selling remains on the table according to the daily chart, targeting weekly support underlined above at ¥125.54. Also of interest, the daily timeframe reveals price action ruptured the upper boundary of a flag pattern on 28th April, drawn from a high of ¥129.41 and a low of ¥127.80.

Assuming buyers regain consciousness and overcome neighbouring supply, traders will be looking to a take-profit objective circa ¥136.63 (drawn by extending the pole’s distance and adding this to the breakout point). Note that this profit objective sits above the weekly timeframe’s ¥135.16 high. Another key note on the daily scale is the relative strength index (RSI) departed from overbought territory.

It’s important to recognise that the decisive exit from the overbought area triggered a double-top pattern (neckline stationed around the 66.93 31st March low and peaks were established from indicator resistance at 87.52) and could lead the RSI to familiar support at 40.00-50.00 (a temporary oversold zone since May 2021) which holds the double-top profit objective within at 45.93.

Supporting the recent bearish drive is the H4 timeframe dipping beneath support at ¥128.72 which is now a resistance level. H4 Quasimodo support is seen at ¥127.44, with a break possibly unleashing movement towards current weekly support at ¥125.54. From the H1 timeframe, a clear-cut decision point is present at ¥128.74-128.44 (fixed to the underside of H4 resistance at ¥128.72). Also noteworthy is space beneath ¥128 appears free of support until around the ¥127 neighbourhood.

Technical Outlook:

For now, chart studies indicate a short-term bearish vibe. Should the H1 decision point at ¥128.74-128.44 hold, there’s little in the way of a drop towards ¥127.

GBP/USD Technical Analysis:

Latest developments out of the weekly timeframe on GBP/USD shows the currency pair finally made contact with Quasimodo support coming in at $1.2164, following four back-to-back weekly bearish candles. This is a major technical level so a rebound—if only temporary—is likely anticipated by many traders. However, it’s still important to remember that this market remains entrenched within a strong downtrend since early 2021.

Meanwhile on the daily timeframe, scope for further bearish activity is visible until support coming in from $1.2018, following the retest of Quasimodo support-turned resistance at $1.2334. For those who follow our analysis on a regular basis you may also recall that continued downside followed the formation of a daily bearish flag pattern formed in early May, made up between $1.2411 and $1.2614 (the profit objective can be plotted as far south as $1.18).

In terms of the daily timeframe’s relative strength index (RSI) bullish divergence appears unlikely within oversold territory at the moment. Bear in mind that the RSI can register oversold signals for extended periods in a downward facing market.

Quasimodo support is active on the H4 scale from $1.2186, with any break exposing 17th May 2020 low at $1.2075. Upstream, supply awaits at $1.2381-1.2320. A closer examination of price action on the H1 scale shows the pair retested Quasimodo support-turned resistance at $1.2248 and is currently exploring territory under $1.2200. H1 Quasimodo support is seen at $1.2114, followed by the $1.21 region.

Technical Outlook:

The weekly timeframe’s Quasimodo support at $1.2164 along with the H4 timeframe’s Quasimodo support at $1.2186 offers a floor in this market at the moment. On the other side of the field, nonetheless, the daily timeframe indicates a lack of support until $1.2018, together with the H1 timeframe circling below $1.22 with room to approach H1 Quasimodo support at $1.2114.

The above, coupled with the market’s downtrend, signals sellers could remain in the driving seat, despite the possibility of a brief recovery attempt. Downside targets rest around the $1.21 region.

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