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Australian Dollar Forecast: Key AUD/USD Levels to Watch

Australian Dollar Forecast: Key AUD/USD Levels to Watch

Justin McQueen, Strategist

Australian Dollar Analysis and Talking Points

  • AUD/USD | Choppy Trade to Persist, Eyes on Bond Market For Direction
  • IG Client Sentiment Remains Bearish AUD/USD

AUD/USD | Choppy Trade to Persist, Eyes on Bond Market For Direction

The AUD has had a welcome surprise after a stellar employment report, where the headline rate rose 88.7k (expectations 30k), which now means that the job losses from the pandemic have now been recovered. The unemployment rate was equally strong having dropped 0.5ppts to 5.8% and is now 0.7ppts above the pre-pandemic level. That said, with the jobs market becoming less of a concern for the RBA, the focus will remain primarily on inflation.

For AUD/USD trading remain choppy with price action in the bond market continuing to dictate sentiment in the G10 FX complex. In turn, the pair has continued to oscillate around the 50DMA, while trend signals (DMI) suggest that trade is likely to persist in sideways fashion in the near-term. On the downside, support is at 0.7700 and 0.7600, while topside resistance is situated at 0.7800 and 0.7850. Going forward, I expect the current range trade to persist, however, for direction, eyes will remain firmly fixed on the bond market.

Moving Average (MA) Explained for Traders

IG Client Sentiment Remains Bearish AUD/USD

Retail trader data shows 50.77% of traders are net-long with the ratio of traders long to short at 1.03 to 1. The number of traders net-long is 4.57% higher than yesterday and 0.36% lower from last week, while the number of traders net-short is 10.01% lower than yesterday and 5.64% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USD prices may continue to fall.

Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger AUD/USD-bearish contrarian trading bias.

AUD/USD Chart: Daily Time Frame

Source: Refinitiv

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