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Australian Dollar Price Outlook: AUD/USD, AUD/JPY, AUD/NZD, AUD/CHF

Australian Dollar Price Outlook: AUD/USD, AUD/JPY, AUD/NZD, AUD/CHF

Daniel Moss, Analyst
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Australian Dollar, AUD/USD, AUD/JPY, AUD/NZD, AUD/CHF – Talking Points:

  • Bull Flag formation could open the door to further gains for AUD/USD.
  • AUD/JPY rates carving out Ascending Triangle formation.
  • AUD/CHF consolidating within Symmetrical Triangle formation.
  • AUD/NZD perched constructively above 55-EMA. Is a resumption of the primary uptrend in the offing?
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The Australian Dollar has grinded gradually lower against its major counterparts over the last few weeks, as the pullback in the broader commodity space weighed on the cyclically-sensitive currency. However, this downside correction may prove short-lived as a series of bullish technical setups begin to take shape on multiple AUD cross. Here are the key levels to watch for AUD/USD, AUD/JPY, AUD/NZD and AUD/CHF rates.

AUD/USD Daily Chart – Head & Shoulders Neckline Retest in Focus

Chart prepared by Daniel Moss, created with Tradingview

AUD/USD rates have stormed higher since April 13, slicing through downtrend resistance extending from the yearly high (0.8007) and pushing 2.63% to fall just short of challenging the 0.7800 handle.

With price tracking above all six moving averages, and carving out a possible Bull Flag continuation pattern, the path of least resistance could be higher in the near term.

However, with the exchange rate yet to gain a firm foothold back above the neckline of the Head and Shoulders pattern validated at the tail-end of March, further downside may yet be in the offing.

With that in mind, failing to close above 0.7785 on a daily basis could open the door for sellers to drive price back towards the trend-defining 55-EMA (0.7680). Clearing that brings the 38.2% Fibonacci (0.7619) back into focus.

On the other hand, a convincing break of flag resistance (0.7785) likely intensifies buying pressure and clears a path to challenge the March high (0.7849). The Bull Flag’s implied measured move suggests the exchange rate could be poised to challenge the yearly high (0.8007) in the coming weeks.

The IG Client Sentiment Report shows 43.33% of traders are net-long with the ratio of traders short to long at 1.31 to 1. The number of traders net-long is unchanged than yesterday and 18.86% lower from last week, while the number of traders net-short is unchanged than yesterday and 8.97% higher from last week.

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

Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed AUD/USD trading bias.

AUD/JPY Daily Chart – Ascending Triangle in Play

Chart prepared by Daniel Moss, created with Tradingview

AUD/JPY rates remain constructively positioned above all six moving averages, as prices carve out an Ascending Triangle just below key psychological resistance at 85.00.

With the RSI and MACD both tracking above their respective neutral midpoints, the path of least resistance appears skewed to the upside.

Ultimately, a daily close above 85.00 is needed to validate the neutral pattern and bring the yearly high (85.45) into play, with the Ascending Triangle’s implied measured move suggesting prices could challenge the 87.50 handle for the first time since 2018.

However, sliding back below the 8-EMA (83.89) may neutralize near-term buying pressure and propel the exchange rate back towards supportive confluence at the triangle hypotenuse and monthly low (83.03).

The IG Client Sentiment Report shows 37.80% of traders are net-long with the ratio of traders short to long at 1.65 to 1. The number of traders net-long is unchanged than yesterday and 0.58% higher from last week, while the number of traders net-short is unchanged than yesterday and 14.50% lower from last week.

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

The combination of current sentiment and recent changes gives us a further mixed AUD/JPY trading bias.

AUD/CHF Daily Chart – Back Test of Yearly Uptrend Hints at Further Downside

Chart prepared by Daniel Moss, created with Tradingview

The technical outlook for the AUD/CHF exchange rate appears biased to the upside, as prices burst back above the trend-defining 55-EMA (0.7064) and consolidate within a Symmetrical Triangle.

That being said, the recent surge higher may prove to be a back-test of the 12-month uptrend broken earlier in the month, given prices have slumped lower in the last two sessions.

Nevertheless, a period of consolidation seems likely in the near term, if prices continue to oscillate within the confines of the Symmetrical Triangle.

A daily close above 0.7200 is needed to validate bullish potential and carve a path for price to challenge the yearly high (0.7260).

Alternatively, slicing below the 50% Fibonacci (0.7007) could inspire liquidation of long positions and generate a downside move to test former resistance-turned-support at 0.6920.

AUD/NZD Daily Chart – Bullish Corrective Structure Hints at Gains

Chart prepared by Daniel Moss, created with Tradingview

AUD/NZD rates have trekked consistently lower since climbing to 6-month highs at the end of last month, with price now perched precariously above the 55-EMA and psychological support at 1.0750.

However, this price action appears to be corrective in nature, which suggests that a continued topside move is on the cards in the near term.

Indeed, with the MACD travelling above its neutral midpoint, and the RSI hovering above 40, bulls seem to be taking back control of the exchange rate.

If the 55-EMA (1.0786) holds firm, a rebound back towards the March high (1.0947) seems reasonably likely, with a break above that brining the 2020 high (1.1044) into the fray.

Conversely, a daily close below 1.0750 could trigger a more extended pullback to the sentiment-defining 200-MA (1.0742).

-- Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

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