AUD/USD Weekly Price Forecast – Australian Dollar Breaks Out

The Australian dollar had a good week, breaking above the psychologically and structurally important 0.75 handle. Now that we have done this, it looks very likely that pullbacks will continue to be bought into, and it makes quite a bit of sense that the trade continues to work if we get good news coming out of stimulus. Quite frankly, the Friday session looks a little lackluster, but this is because of that very issue. The United States is currently debating a stimulus package, which is normally bad for the US dollar and of course good for commodities which the Aussie dollar represents.

AUD/USD Video 14.12.20

The idea is that we would go back into a “reflation trade”, or traits where construction becomes important, devaluation of the currency is right behind it, and of course “things” are needed such as hard commodities. All of this leads towards the Australian dollar strengthening, and most certainly the US dollar weakening. That being said, it does not necessarily mean that is going to be a shot straight up in the air, because the US Dollar is a bit oversold so the occasional pullback would make sense anyways. From a longer-term perspective, this pair looks as if it has plenty of support near the 0.74 handle, and may be looking towards the 0.7750 level, and then the 0.80 level after that.

All things being equal, we are in a massive uptrend, and it looks like we just broke above the top of a flag potentially, which could mean a move all the way to the 0.95 level, but that is obviously something for several years down the road not anytime soon.

For a look at all of today’s economic events, check out our economic calendar.