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AUD/USD & ASX 200 Price Forecast: Aussie Assets Probe Resistance

AUD/USD & ASX 200 Price Forecast: Aussie Assets Probe Resistance

2020-07-20 21:35:00
Peter Hanks, Analyst
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AUD/USD & ASX 200 Price Outlook:

  • AUD/USD trades slightly beneath its peak in the year-to-date as risk appetite surges
  • Meanwhile, the ASX 200 grapples with resistance near a Fibonacci level at 6,125
  • As technology stocks in the United States soar, both AUD/USD and the ASX 200 may benefit from the surge in risk appetite

Australian Dollar & ASX 200 Price Forecast: Aussie Assets Probe Resistance

The week kicked off with a remarkable surge in risk assets as hot technology stocks like Amazon and Microsoft pressed ever higher. As the leaders in speculative risk appetite, a continuation higher for the FANGMAN group and the Nasdaq 100 is an encouraging sign for other risk-sensitive markets like AUD/USD and the ASX 200.

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To that end, both markets stand slightly beneath longstanding technical resistance. If risk trends continue the week as they began, however, the swelling demand for growth-sensitive assets may allow the Aussie markets to surmount the hurdles overhead.

AUD/USD Price Chart: Daily Time Frame (January 2019 – July 2020)

audusd price chart

As for AUD/USD, the resistance in question exists around the 0.70 to 0.7067 zone, with the lower bound derived from the psychological 0.70 mark and the upper from the pair’s recent swing high. 0.7067 also doubles as the year-to-date high for AUD/USD, affording the level further influence. A break above the area may allow for a larger continuation higher.

ASX 200 Price Chart: 4 – Hour Time Frame (January 2020 – July 2020)

ASX 200 price chart

Price action in the ASX 200 reveals a relatively similar technical formation. The Australian equity index has climbed for months from the depths of the coronavirus crash and has moved within reach of the 61.8% Fibonacci retracement of said pullback. Evidently, the level has proven difficult to overcome as recent peaks top out at – or slightly above – the horizontal line.

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Nevertheless, the ASX 200 has climbed assiduously, notching a series of higher-lows that have kept the rising trendline from March intact. As a result, the index has seen price action contract rather significantly as it runs out of real estate between resistance overhead and support underneath. Thus, it seems a break is imminent with either necessity or earnest intention to blame.

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Either way, the technical formation aligns neatly with AUD/USD and even the S&P 500 which has been negotiating resistance of its own. With that in mind, upcoming earnings from market leaders like Microsoft may provide the necessary spark to break the outlined patterns. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.

--Written by Peter Hanks, Strategist 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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