- AUD/USD back below the 0.7750 mark on Wednesday, closing with losses of about 0.5%.
- Focus will be on events stateside this week, with Biden unveiling stimulus plans, Fed Chair Powell and plenty of data.
AUD/USD came off the boil on Wednesday, closing FX trade with losses of about 0.5% or 40 pips and dropping back below the 0.7750 mark. The pair has been setting lower highs and higher lows since the start of 2021 and appears to be consolidating within a pennant structure that could be subject to a breakout.
To the downside, support comes in the form of an uptrend linking the 28 December high and the 4 and 11 January lows. A break below this trendline would open the door to a move towards the 21-day moving average at 0.7650, which also happens to coincide with the current 2021 low. Conversely, an upside break would likely lead to a challenge of last Friday’s 0.7800 high and perhaps the current 2021 high at 0.7820.
AUD has been for the most part focused on USD dynamics and global risk appetite. Hence, AUD/USD slipped on Wednesday in fitting with broad USD strength. That is likely to remain the case for the rest of the week, although AUD might also take some independent impetus from commodity prices (eyes will, as ever, be on the likes of oil, gold, copper and iron ore prices).
In terms of the key drivers for the rest of the week; AUD/USD will for the most part have its eyes stateside. Incoming US President Joe Biden unveils his fiscal stimulus plan on Thursday, on which day Fed Chair Jerome Powell also speaks. Eyes will also be on US data, including weekly jobless claims numbers on Thursday and December Retail Sales, December Industrial Production and January Michigan Consumer Sentiment numbers on Friday.
AUD/USD four hour chart