- The dollar rose earlier this week as tensions between Russia and Ukraine escalated.
- The Trump trade was paused as traders awaited new developments.
- The Reserve Bank of Australia maintained its hawkish tone.
The weekly AUD/USD forecast shows a slight bounce as the RBA remains hawkish, but the pair still has downside potential.
AUD/USD Ups and Downs
Aussies rebounded this week as the dollar paused its Trump rally and the RBA remained hawkish. The dollar paused this week after a strong rally on Trump’s victory. However, it rose earlier this week as tensions between Russia and Ukraine escalated.
Meanwhile, the Trump trade was paused as traders awaited new developments. US data showed an unexpected drop in jobless claims, reducing the likelihood of a December Fed rate cut.
Elsewhere, the Reserve Bank of Australia maintained its hawkish tone, saying it was in no rush to cut rates as they were not as high as in other major economies.
Next week’s key events for AUD/USD
Next week, investors will focus on reports from the US, including Fed minutes, GDP and durable goods orders. The minutes of the FOMC meeting will contain a comprehensive account of the last policy meeting, which could contain clues about what policymakers intend to do in the future. The meeting took place just after Trump won the US presidential election, changing the outlook for US economic growth and inflation. Accordingly, market participants will wait to see if this changes the tone of policy makers.
Meanwhile, the GDP report will show the health of the economy. Economists expect a 2.8% increase after a similar reading last month.
AUD/USD weekly technical forecast: RSI divergence prompts pullback
From the technical side, AUD/USD the price is in a downtrend, constantly making lower highs and lows. Furthermore, the price is trading below the 22-SMA with RSI below 50, supporting the bearish bias. The downtrend is paused at the critical level of 0.6450 after breaking below the 0.6550 support. The pause allowed the bulls to revisit the recently broken support zone.
–Are you interested in learning more about forex broker scalping? Check out our detailed guide-
The pullback could continue to the 22-SMA in the coming week before the bears resume the downtrend. To confirm the continuation of the downtrend, the price must break below 0.6450 to make a new low. However, the RSI has made a slight bullish divergence that could signal a reversal. Regardless, the bulls must break above the SMA to confirm a reversal. Otherwise, the downward trend will continue.
Do you want to trade Forex now? Invest in eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
