Bottom line:  AUDUSD medium term structure remains bullish until prices stay above 0.5505 levels. If intermediary support at 0.6250 levels hold well, bulls might target higher towards 0.6700 and 0.6800 respectively.

Fundamental Outlook:

AUDUSD has managed to produce an impressive come back since its March 18 lows at 0.5505 levels. The pro risk currency has rallied over 1000 pips and register a high at 0.6570 levels on April 30, 2020. As the momentum for risk assets (Global Equity Markets) begin to fade amidst fears of a US-China trade war and looming recession linked to COVID-19; it would be interesting to see how AUDUSD price action behaves. Watch out for the Friday Monetary Policy statement from RBA for some volatility in AUDUSD.

Dow Jones optimism might be fading after the indice along with SPX500, reversed sharply from close to 25000 levels last week. The price action would also depend on the upcoming Job Data on Friday, as record job losses are expected (over 21 million) and unemployment reaching double digits (roughly 16%).

Technical Analysis:

AUDUSD remains broadly in control of bulls as prices trade above 0.6250 levels, which is intermediary support. A push above 0.6500 mark would be encouraging to bulls as AUDUSD might be heading towards 0.6700/0.6800 resistance levels.

Structurally, AUDUSD bulls have managed to carve a series of higher highs and higher lows since 0.5505 lows and pushed higher by over 1000 pips over last few weeks. A push through 0.6700 and higher would confirm that bulls are here to stay and that the rally from 0.5505 is still incomplete. We can expect a corrective drop after taking out resistance at 0.6700 levels, which would provide yet another opportunity to initiate long positions.

Most traders might be preparing to take profits on long positions around 0.6700 levels. They might enter buying again at lower levels once a corrective drop is complete.

Prepared by

Harsh Japee, Technical Analyst.

AUDUSD Chart

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