Australian Dollar Price Outlook:
- AUD/USD tested support around 0.6678 before probing trendline resistance overhead and retreating
- AUD/JPY has encountered a topside barrier around 74
- Elsewhere, AUD/NZD will look to pierce a price barrier around 1.0435
AUD/USD Technical Forecast
The Australian Dollar has suffered as US Dollar strength and risk aversion has worked to pressure AUD/USD to longstanding support around 0.6678. The level has helped to buoy price multiple times in recent months, but continued retests could speak to further bearishness ahead. In pursuit a recovery rally, AUD/USD will have to reclaim horizontal support and breach the descending trendline overhead.
AUD/USD Price Chart: Daily Time Frame (October 2018 – February 2020)
That being said, a brief test below the level on Friday could have opened the door to further losses. Trading at an 11-year low already, a confirmed break beneath the line may allow USD bulls to press to 0.6560 due to the scarcity of technical support. Consequently, the risk-reward profile of AUD/USD is tilted to the downside in my opinion. IG Client Sentiment Data also suggests further losses may be in store as the vast majority of retail traders are net-long.
AUD/JPY Technical Forecast
Similar price action is observable in AUD/JPY as a brief rally last week was quickly reversed after probing resistance around 74. With a daily close beneath the descending trendline around 73.40, AUD/JPY has been left vulnerable to further losses in the coming week. Therefore, the pair may test 72.48 in an attempt to break lower and probe support around 72.
AUD/JPY Price Chart: 4 – Hour Time Frame (September 2019 – February 2020)
Sentiment is similarly bearish as a majority of IG Clients favor AUD/JPY strength. Sign up for my webinar below to learn how to incorporate IG Client Sentiment Data in your trading strategy. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
AUD/NZD Forecast
In pursuit of Aussie strength, AUD/NZD may be an attractive pair over the longer term, but it stands at an unappealing position from a risk-reward perspective at present. After rallying versus the Kiwi last week, the pair has encountered confluent resistance around 1.0435. Together, the barriers will look to spark a reversal lower which could see AUD/NZD return to Fibonacci support around 1.0352 before a run at 1.03 can be attempted.
AUD/NZD Price Chart: Daily Time Frame (January 2019 – February 2020)
Considering the current standing of AUD/NZD, it may be prudent for a more attractive set up as the long lower wick on Friday’s daily candle speaks to sustained bullish interest but technical resistance looms immediately overhead.
--Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
