Earlier this week, the dollar saw an uptick as tensions between Russia and Ukraine were on the rise. Meanwhile, the surge associated with the Trump administration took a breather, with traders eagerly awaiting the next big moves.
The Reserve Bank of Australia (RBA) maintained its firm stance, signaling confidence in their economic strategy.
### Fluctuations in AUD/USD
This week, the Australian dollar found some footing as the U.S. dollar took a step back from its Trump-era highs, and with the RBA staying hawkish. The Greenback had initially surged earlier in the week following the increased friction between Russia and Ukraine. However, it later paused as market participants began holding their breath for further developments. In the U.S., unexpected data revealed a decrease in jobless claims, which in turn, dampened the prospects of a rate cut from the Federal Reserve by December.
On the other side of the globe, the RBA reaffirmed its current economic game plan, implying no rush to cut rates since they aren’t as elevated as those in many other major economies.
### What to Watch for in AUD/USD Next Week
Looking ahead to next week, all eyes will be on the upcoming U.S. reports, including the Federal Reserve’s meeting minutes, GDP figures, and orders for durable goods. The FOMC will provide insights from its last policy meeting held after the Trump election victory, potentially offering clues on any shifts in their economic plans amid changing growth and inflation forecasts. Investors are keen to see if there’s a change in the tone of policymakers post-election.
The GDP report will be a critical barometer of economic health, with economists forecasting a 2.8% rise, building on last month’s similar performance.
### AUD/USD Weekly Technical Analysis: RSI Divergence Signals Possible Pullback
From a technical perspective, AUD/USD remains in a downward trajectory, characterized by a series of lower highs and lows. The currency pair is currently below the 22-period Simple Moving Average (SMA), with the Relative Strength Index (RSI) sitting below 50—indicative of a bearish sentiment. This downtrend halted at the key 0.6450 level after slipping below the 0.6550 support, giving buyers a chance to revisit this zone.
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The recent pullback might edge towards the 22-SMA before the bears potentially regain control. For the bearish trend to confidently resume, prices need to break through 0.6450 for a new low. However, a slight bullish divergence in the RSI suggests a potential reversal could be on the cards. Bulls would need to push past the SMA for a genuine reversal signal; failing which, the bearish momentum is anticipated to persist.
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