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Australian Dollar Technical Forecast: AUD/USD, AUD/NZD, AUD/JPY

Australian Dollar Technical Forecast: AUD/USD, AUD/NZD, AUD/JPY

2020-08-17 21:00:00
Rich Dvorak, Analyst
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AUD PRICE OUTLOOK: AUSTRALIAN DOLLAR BULLISH TREND PUSHES ONWARD VS USD, NZD, JPY

  • AUD price action maintains its bullish trend as indicated by key moving averages
  • Australian Dollar strength may persist contingent on sustained volatility suppression
  • AUD/USD, AUD/NZD and AUD/JPY could press for fresh year-to-date highs

The Australian Dollar is advancing to start the week. AUD price action is showing strength against its US Dollar and New Zealand Dollar peers in particular, but the Aussie is trading roughly flat against the Yen. Australian Dollar bulls are likely steering the sentiment-linked AUD higher as risk appetite flourishes amid sustained volatility suppression.

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This is illustrated by the inverse relationship generally held between the S&P 500 VIX Index fear-gauge and the Australian Dollar, which is shown below using an equally-weighted benchmark of AUD/USD, AUD/NZD and AUD/JPY.

AUSTRALIAN DOLLAR PRICE CHART & VIX INDEX OVERLAID: DAILY TIME FRAME (2020 YEAR-TO-DATE)

AUD Price Chart Australian Dollar Technical Forecast with VIX Index Overlaid

Chart created by @RichDvorakFX with TradingView

Further declines in readings of expected market volatility might facilitate the Aussie’s next bullish leg. Also, seeing that it is often the case that the trend is your friend, there could be potential for the Australian Dollar to extend its climb against its USD, NZD and JPY peers. The prolonged absence of volatility may nevertheless leave the Australian Dollar vulnerable as complacency builds.

AUD/USD PRICE CHART: DAILY TIME FRAME (15 FEB TO 17 AUG 2020)

AUDUSD Price Chart AUD to USD Australian Dollar Technical Forecast

That said, with spot AUD/USD price action reclaiming its short-term 8-day moving average, it looks like Australian Dollar bulls have gained control again over the Greenback. AUD/USD could soon edge toward 2019 highs around the 0.7265-price level with the US Dollar on defense once again.

AUD/USD BULLISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -5% -1% -3%
Weekly 1% 5% 3%
What does it mean for price action?
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AUD/NZD PRICE CHART: WEEKLY TIME FRAME (APR 2017 TO AUG 2020)

AUDNZD Price Chart AUD to NZD Australian Dollar Technical Forecast

AUD/NZD price action is rocketing higher after what appears to be a topside breakout from an inverse head-and-shoulders pattern. This follows five consecutive weeks of gains notched by the Australian Dollar against its Kiwi cousin. From a fundamental perspective, diverging monetary policy guidance recently provided the RBA and RBNZ stands out as one possible catalyst helping propel the ongoing rally set forth by AUD/NZD.

AUD/JPY PRICE CHART: DAILY TIME FRAME (09 DEC 2019 TO 17 AUG 2020)

AUDJPY Price Chart AUD to JPY Australian Dollar Technical Forecast

Comparing AUD/USD and AUD/NZD to AUD/JPY, however, reveals that Australian Dollar strength against the Japanese Yen has been relatively lacking. That said, AUD/JPY price action maintained its 8-day moving average despite Monday’s broad-based bounce recorded the JPY.

AUD/JPY BULLISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -8% 14% 3%
Weekly -4% 3% 0%
What does it mean for price action?
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This could indicate that the Australian Dollar has potential to prolong its larger bullish trend. Correspondingly, it now looks like AUD/JPY may be gearing up for another attempt at the 77.00-handle since forming a double-top pattern on June 5 and July 21.

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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

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