- The dollar had its worst week in more than two months.
- Poor US employment data increased the likelihood that the Fed will cut rates in September.
- The Reserve Bank of Australia will make a rate decision on Tuesday.
The weekly forecast for AUD/USD leans bullish as the likelihood of a Fed rate cut in September increases due to weaker US data.
AUD/USD Ups and Downs
The Australian ended the week on dollar weakness. With no key economic reports from Australia, the Australian dollar was at the mercy of the US dollar. Meanwhile, the dollar had its worst week in more than two months.
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Dollars returned to the market after Powell argued that the Fed will eventually cut rates. Moreover, poor US employment data increased the likelihood that the Fed will cut rates in September. In addition, the ISM released gloomy US services PMI data, further supporting bets for a September cut.
Next week’s key events for AUD/USD
Investors will focus on just one big event next week. The Reserve Bank of Australia will make a rate decision on Tuesday. According to a Reuters poll of economists, the central bank will keep rates unchanged as it works to reduce inflation. However, investors will look for clues to a rate cut in statements from policymakers after the meeting.
Moreover, economists have changed their outlook for a rate cut and now expect only one of the previous two in 2024. This change follows recent data showing a smaller-than-expected decline in inflation in Q1.
AUD/USD Weekly Technical Forecast: Bulls make another attempt to break a key resistance zone
On the technical side, the AUD/USD price has returned to the resistance zone consisting of the key psychological level of 0.6600 and the 0.5 Fib level. The bulls fought for a long time to break above this zone, but failed.
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Accordingly, the price has mostly moved sideways. The recent rise in bullish momentum at the 0.6400 support level has prompted the price to retest this resistance zone. The bullish bias is strong, with price well above the 22-SMA and the RSI heading towards the overbought region.
However, the bulls must close well above this zone and make another bullish candle to confirm a breakout above the zone. Otherwise, the price will fall below the SMA. If the bulls manage to break through the resistance, the price is likely to retest the 0.6851 level.
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