AUDUSD Charges Ahead

AUD/USD has emerged from a Trading Range initiated in late-April, charging higher...


AUD/USD is firmly maintaining a Bullish Bias following a Powerful Squeeze initiated in March, as the Australian economy is showing signs of recovery from the coronavirus impacts.

In fact, the Australian dollar is firming up along with the rallying Australian stock market. Reserve Bank of Australia Governor Philip Lowe said the economy is faring better than initially feared.

In early May, the central bank kept its key interest rate unchanged at 0.25% as expected.

Later, official data showed that Australia's jobless rate stepped up to 6.2% in April (8.2% expected) from 5.2% in March. And Westpac Bank reported that Consumer Confidence rose 16.4% on month in May, compared to a drop of 17.7% in April.

Obviously, Governor Lowe is right.

Meanwhile, the Aussie is also taking advantage of a softening U.S. dollar amid a risk-on environment. Prices of U.S. stocks and other assets regarded as risky are rebounding recently as investors have been encouraged by potential development of coronavirus vaccines and further easing of coronavirus-induced lockdown measures around the world.

However, investors should not overlook potential impacts of heightened tensions between the U.S. and China, which could serve to reduce risk appetite across markets.  

On a Daily Chart, AUD/USD has emerged from a Trading Range initiated in late-April.

Market chart demonstrating AUD vs USD Dollar(USD) Charges Ahead by
Source: GAIN Capital, TradingView

Currently it is trading at levels above the ascending 20-day moving average, which stands above the 50-day one.

Also, the Bullish Pattern of Higher Lows in place since March remains intact.

Therefore, the technical configuration favors a bullish bias for AUD/USD.

Bullish investors should expect Overhead Resistance at 0.6750 (around the high of February) and 0.6930 (around a key resistance seen in January).

Only a return to the Key Support at 0.6400 would call for a Bearish Reversal.


More from Forex

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account