AUD/USD Price Forecast: Aussie Dollar Pushing Toward Key Resistance

10 and one 10 us dollar bill

AUD/USD PRICE ANALYSIS

AUD/USD FUNDAMENTAL BACKDROP

This week has bolstered the Australian Dollar against the greenback largely due to a recent surge in commodity prices particularly iron ore prices (Australia’s biggest commodity export), after Chinese investors re-entered markets. Commodity prices are expected to continue the surge as long as the global recovery unfolds as expected. This could be a strong sign for further optimism around the Aussie Dollar however, a worrying sign for the RBA as a strengthening AUD could hinder exports.

Yesterday, Australian economic data showed that the unemployment level is falling which supported AUD/USD upside. A weakening U.S. Dollar is adding to their worries as many analysts do not expect much more in terms of rising U.S. yields which could limit the recent strength in the Dollar. The $1.9 trillion U.S. stimulus package, if passed at that figure, could theoretically stretch Dollar weakness which could support the AUD/USD uptrend.

Rising yields on Australian 10-year bonds (see chart below) provide yet another fundamental support structure for the Aussie Dollar. A sustained rise in bond yields across maturities may likely prolong the positive correlation between AUD/USD and rising yields.

AUSTRALIAN 10Y BENCHMARK GOVERNMENT BOND VS AUD/USD

AUD/USD vs autralian 10y benchmark government bonds

Chart prepared by Warren Venketas, Refinitiv

Later today U.S. PMI data (14:45GMT) will be released which could cause some price volatility leading up to the announcement. A notable deviation from forecasts (58.5) may further this volatility so ensuring sound risk management technique is essential.

AUD/USD economic calendar

DailyFX Economic Calendar

AUD/USD TECHNICAL ANALYSIS

AUD/USD DAILY CHART:

AUD/USD daily chart

Chart prepared by Warren Venketas, IG

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