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Australian Dollar Forecast: AUD/USD, AUD/CAD, AUD/JPY

Australian Dollar Forecast: AUD/USD, AUD/CAD, AUD/JPY

2020-02-26 22:00:00
Peter Hanks, Analyst
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Australian Dollar Price Outlook:

  • AUD/USD broke beneath critical support around 0.6678 which has allowed for further losses
  • AUD/CAD slipped to its lowest level in nearly a decade despite recent Canadian Dollar weakness
  • AUD/JPY remains threatened above nearby support

AUD/USD Price Forecast

AUD/USD suffered a critical break beneath support at 0.6678 last week as risk aversion spiked on coronavirus fears. In the days since, the Australian Dollar has continued significantly lower without notable support to buoy price. Despite its extended decline, the pair still lacks a readily available support zone and the driving fundamental concern behind the widespread risk aversion remains uncontrolled.

AUD/USD Price Chart: Daily Time Frame (November 2018 – February 2020)

audusd daily price chart

Further still, IG Client Sentiment Data reveals retail traders are overwhelmingly long – expressing confidence the selloff is complete – a revelation we typically view as a sign AUD/USD remains vulnerable. With the fundamental and technical forces leaning lower, it seems possible the pair may venture lower and could eventually test support around 0.6328 which dates to 2009.

AUD/USD MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 9% -4% 2%
Weekly 20% 34% 27%
What does it mean for price action?
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AUD/CAD Price Forecast

Similarly, AUD/CAD has experienced a string of sizable declines despite weakness in the Canadian Dollar elsewhere. As a result, the pair trades at its lowest level since June 2010 and may lack noteworthy support until the 0.8655 area – originating from the 38.2% Fibonacci retracement of the pair’s all-time high and low.

AUD/CAD Price Chart: Daily Time Frame (October 2016 – February 2020)

audcad daily price chart

Chart created with TradingView

Either way, supportive zones are difficult to outline at the current spot price and the damage dealt to the Australian economy from the coronavirus may continue to undermine the Aussie. Should bullishness emerge, however, an early barrier to the recovery will likely reside around 0.89.

AUD/JPY Price Forecast

Interestingly, the sentiment-linked AUD/JPY has not traveled to extremes like AUD/USD and AUD/JPY have. That is not to say the pair has been invulnerable to losses - as it fell significantly – but the pair remains a comfortable distance from decade lows or the similarly historic levels one might expect given price action elsewhere and the risk relationship between the two currencies.

AUD/JPY Price Chart: Daily Time Frame (April 2019 – February 2020)

audjpy price chart daily

Consequently, AUD/JPY may enjoy support nearby as it has recent price action nearby. Residing around 71.88, the horizontal level will look to stall further declines in the days to come as investors try to ascertain the appropriate value for growth-linked assets. In the meantime, it appears as though the Australian Dollar may remain pressured until the viral outbreak is contained and economic activity returns to normal.

AUD/JPY MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 4% 3% 4%
Weekly 2% 69% 29%
What does it mean for price action?
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--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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