- AUD / USD is up nearly 2%, after trading at 0.6993 lows on Friday.
- Risk appetite favors risk-sensitive currencies, which is why the Australian dollar rises.
- AUD / USD Price Forecast: Leaning higher but facing strong resistance in the 0.7140-50 range.
The AUD it continues to advance throughout the week, rising 1.9% from Friday’s low of 0.6993, trading at 0.7148, during the American session at the time of writing. In the evening session, optimistic news about the effectiveness of the vaccine against the Omicron strain kept the appetite for riskier assets. The first laboratory studies on two of the most successful vaccines showed that a third dose of the COVID-19 vaccine neutralizes the omicron variant.
That said, during the Asian and European sessions, the AUD/USD extended its gains, trading above Tuesday’s high at 0.7122, though it stalled around the confluence of Oct 23, 2020 high and R1 daily pivot around 0.7157-47.
On Tuesday, the Reserve Bank of Australia (RBA) kept its cash on hold rate at 0.10% and said it would continue its QE program until at least mid-February, the central bank reported.
RBA Governor Philip Lowe commented that the RBA board would not increase the cash rate unless inflation is sustainably kept within the 2-3% target range. He further said that “the economy is expected to return to its pre-Delta trajectory in the first half of 2022.” Regarding the Omicron variant, Lowe added that it is a new source of “uncertainty, but it is not expected to derail the recovery.”
AUD / USD reacted higher. However, it appears that USD bulls made some gains as the market waits for the November US Consumer Price Index to release on Friday after Fed policymakers further emphasized the need for a faster reduction in bonds, led by Fed Chairman Jerome Powell.
AUD / USD Price Forecast: Technical Outlook
On the 4-hour chart, the AUD / USD is trading within the 50 and 100 Simple Moving Average (SMA) at 0.7123 and 0.7171, respectively. Despite trading below the 200 SMA, the break of the one-and-a-half downtrend line that coincides with the breakout of the Aussie above the 50 SMA has the pair’s bias as bullish. However, a clear break out of the 100 SMA could pave the way for further gains.
In that result, the first resistance would be 0.7200. A break of the latter would expose a five-month rising trend line, previous support turned into resistance around 0-7266-80, immediately followed by the 200 SMA at 0.7302.
Additional technical levels
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