Bottom line: AUDUSD long term bullish structure remains intact as 0.5505 levels hold. Bulls are targeting to push above 0.6700 and 0.6830 levels in the short term.
Fundamental Outlook:
AUDUSD rose this morning as inflation figures came in at 2.2% beyond expectations of around 2%. The currency trades around 0.6230 as we write this article and expected to rise further. Still, with rising inflation, it is unlikely that the RBA will hike interest rates anytime soon. It would largely depend on how fast is the recovery post lock down.
Dow Jones outlook shall rely heavily on the Q1 earnings, US GDP figures and the Fed rate decision to be out later today. The US Equity markets along with major Global Indices are set to face a gloomy outlook as Q1 GDP figures are expected to print lower (US Q1 GDP forecast is -4% against 2.4%). Most traders will also set their eyes on the Fed Rate Decision today, which is expected to be at 0.25%.
On the COVID-19 pandemic, US crosses 1 million mark, the highest number of affected cases across the globe while the total number of deaths has been recorded at 59,266.
Technical Analysis:
AUDUSD resumed rally from 0.6250 lows since April 21, 2020 as expected and discussed last week. Bulls remain in control for now as the currency trades around 0.6540 levels as we write this article. The short term targets are 0.6610/20 and 0.6700 respectively.
Structurally, AUDUSD might have carved a meaningful low at 0.5505 levels, on March 18, 2020. We were expecting a rally towards initial resistance at 0.6700 levels at least. Once AUDUSD breaks above 0.6700, it would also confirm that bulls are here to stay for longer term pushing prices towards 0.7300/0.7500, in the next several months.
Most traders might be preparing to hold long positions for now and targeting to exit around 0.6700 and 0.6830 levels respectively.
Prepared by
Harsh Japee, Technical Analyst.
AUDUSD Chart
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