In previous AUD/USD forecast almost two weeks ago, it is noted that the price was undergoing a flat consolidation within a bullish trend, suggesting that a long trade from a bounce off the support level at $0.6661 would likely have been a prudent decision. We also considered that a bullish breakout beyond $0.6760 would indicate positive momentum and could serve as a potential trigger for a long trade entry. Regrettably, neither of these setups materialized that day; however, the significant increase observed over the past fortnight has validated my inclination to pursue long positions in this context.
The technical landscape reveals a notable ascent, as the price has recently approached a significant round figure at 0.7000, which is beginning to function as a resistance level. While I am not suggesting a significant reversal is imminent, it is quite probable that the price will consolidate within this range in anticipation of the US Federal Reserve policy meeting scheduled for later today. Any alteration to rates is not under consideration. Fundamentally, there is a pronounced selloff in the US Dollar, accompanied by notable relative strength in the Aussie.
The recent movements in the greenback can likely be attributed to substantial funds exiting the US Dollar, as global confidence in the United States as a safe haven diminishes, particularly in light of the significant policy shifts initiated by the Trump administration. The greenback is experiencing a prolonged downward trajectory, and it appears to be gaining momentum, with little indication of a forthcoming reversal in the near term. Earlier today, President Trump stated that he is indifferent to the potential decline of the Dollar.
For the Australian dollar, recent inflation data has emerged significantly above forecasts, with an annualized increase from 3.4% to 3.8% that was not anticipated. The Reserve Bank of Australia stands as the sole major central bank with a credible opportunity to implement a rate hike, a move that is expected to bolster the Australian dollar. For these reasons, it is preferring to engage solely in long trades here, either from a rebound at any of the previously identified support levels or subsequent to a sustained bullish breakout above $0.7030. The likelihood of a breakout scenario occurring prior to the Fed’s forthcoming release is quite low.