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Australian Dollar Week Ahead: AUDUSD, AUDJPY Near-Term Reversals?

Australian Dollar Week Ahead: AUDUSD, AUDJPY Near-Term Reversals?

Daniel Dubrovsky, Strategist

AUDUSD, AUDJPY Technical Forecast

  • AUDUSD looking to test resistance in near-term reversal
  • Weekly chart hints of downtrend resumption medium-term
  • AUDJPY may also rise in near-term, momentum fading

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AUDUSD Technical Outlook

Near-term technical signals hint that the Australian Dollar may continue rising against its US counterpart and perhaps the Japanese Yen. Looking at AUDUSD, it found a bottom above 0.6827, the January 2016 low, after briefly falling under 0.6865, the May low. This solidified near-term support, separating it from lows last achieved in March 2009 which also align with this year’s “flash crash” wick in January.

The false downside breakout was accompanied with positive RSI divergence, a sign of fading momentum. From a technical perspective, whether or not AUDUSD may find further gains in the week ahead largely depend on a couple of important barriers that one ought to keep an eye on. The first is a descending channel of resistance from April. The second is a psychological barrier between 0.6982 and 0.7012.

AUDUSD Daily Chart

AUDUSD

However, the weekly AUDUSD chart reveals something interesting. After cautious gains this past week, a Falling Three Method bearish candlestick pattern, that formed beforehand, still holds. The formation still requires confirmation via a close under the June 10 weekly candle. If resistance pointed out on the daily chart holds ahead, that may be the case looking further down the road.

AUD/USDWeekly Chart

AUDUSD

AUDJPYTechnical Outlook

Now taking a look at the sentiment-linked AUDJPY, the pair’s dominant downtrend since late April still holds despite gains in the S&P 500 as RBA rate cut bets undermine the Aussie’s appeal from a yield perspective. The pair finds itself stuck around 0.74.47, the lows achieved back in 2012 and 2016. Like with what we saw in AUDUSD, positive RSI divergence indicates fading momentum to the downside in spot AUDJPY.

This warns that more consolidation could be ahead, perhaps even opening the door to testing the falling trend line from April. Just above it lays 75.41, the close of January’s “flash crash”. If there is a rise finally due in AUDJPY, keep a close eye on these psychological barriers. If they hold, this may keep the dominant downtrend intact.

For more updates on the Aussie Dollar, you can follow me on twitter here @ddubrovskyFX where I will also be watching out for prominent fundamental developments, such as the upcoming G20 leaders summit.

AUDJPY Daily Chart

AUDJPY

* Charts created in TradingView

FX Trading Resources

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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

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