AUD/USD Weekly Forecast: Posing Threat To Challenge YTD Lows

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• Better Australian jobs report data helped overcome the risk-off market sentiment.
• As expected, the Fed announced doubling the tapering speed in its December meeting.
• Markets participants are looking at US GDP, durable goods, and the Aussie Westpac Leading Index.

The AUD/USD weekly forecast suggests a positive scenario in fundamental terms. However, the technical perspective remains unchanged. Although the AUD/USD pair fell to 0.6992, its lowest level since Nov. 1, it ended the week with gains in the 0.7160 range. Due to Wednesday’s Federal Reserve decision and positive employment data in Australia, the pair benefited from broader dollar weakness.

Rates remained unchanged, but the central bank doubled its target to fall to $30 billion per month by 2022. The central bank will cease buying $20 billion in government bonds and $10 billion in mortgage-backed securities monthly due to this decision, and the interest rate will also be hiked earlier. Based on the Fed’s scatter chart, three rate hikes are now expected in 2022, followed by three in 2023.

The central bank revised its inflation forecast upward to 5.6% for 2021 and 2.6% for 2022, respectively, up from 4.2% and 2.2% previously. According to the current forecast, the economy will grow 4.0% in 2022, up from the previous median forecast of 3.8%, while it will grow 2.2% in 2023, up from 2.5% in September.

In November, Australia reported creating 366.1 thousand jobs, well above the expected 200,000. On a stronger-than-expected economic recovery, the unemployment rate fell to 4.6%, and economic activity rose to 66.1%. Although the stock market fell on Friday, dragging AUD/USD lower, the pair reached 0.7223, its highest level in more than a month.

Key Data/Events for the AUD/USD Pair

Next week we’ll have a data-driven time, with the US releasing its third-quarter GDP and November durable goods orders and the EU releasing consumer confidence data. In addition, the Westpac Leading Index for Australia will be published in December, and retail sales will be published for November.

AUD/USD Weekly Technical Forecast: Bearish Dominance to Continue

Although the FOMC led gains, the AUD/USD pair closed the week back to square one. The price closed back below 20-day SMA, posing a threat to challenge 0.7100 handle ahead of 0.7100. The daily volume is, however, below the average. As long as the price remains below the ascending trendline of 0.7275, bears will keep the dominance.