AUD/USD Forecast Jan. 21-25 – Aussie Takes Breather From Rally

The Australian dollar paused last week, after starting the year with strong gains. What’s next? The focus will be on December employment numbers. Here is an outlook for the highlights of this week and an updated technical analysis for AUD/USD.

The risk-on atmosphere which kicked off 2019 has subsided, with investors opting for the sidelines last week. The U.S. government shutdown and the ongoing global trade war have left investors in a cautious mood, as the Aussie had a quiet week.

Australian indicators were mixed last week. The MI Inflation Gauge gained 0.4% in December, its strongest gain since March 2017. However, Westpac Consumer Sentiment plunged 4.6%, its sharpest decline in over three years.

AUD/USD daily graph with support and resistance lines on it. Click to enlarge:

  1. MI Leading Index: Tuesday, 23:30. The index continues to struggle, and has not had a gain above 0.1% in the second half of 2018. Another soft reading is likely in the December release.
  2. Employment Change: Thursday, 00:30. The economy created more than 30,000 jobs in the October and November, pointing to a stronger labor market. Will this positive trend continue?
  3. Unemployment Rate: Thursday, 19:30. In November, the unemployment rate ticked up to 5.1%, after two successive months at 5.0%.

*All times are GMT

AUD/USD Technical Analysis

AUD/USD showed limited movement throughout the week. the week. The support line of 0.7165, (mentioned last week) was busy and the pair finally broke through on Friday.

Technical lines from top to bottom:

With AUD/USD showing little movement last week, our technical analysis remains intact:

We start with resistance at 0.7612, which has been a resistance line since June.

0.7480 capped the pair in mid-July and defends the round 0.75 level.

Next is the round number of 0.74, the high point reached at the wake of December. This is followed by 0.7340, which the pair breached in late November.

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