The V-shape recovery in AUD/USD seems to have stalled ahead of the December high (0.6515) as it struggles to retain the advance from the weekly low (0.6344).
By: David Song, Strategist
Australian Dollar Outlook: AUD/USD
The V-shape recovery in AUD/USD seems to have stalled ahead of the December high (0.6515) as it struggles to retain the advance from the weekly low (0.6344).
AUD/USD V-Shape Recovery Stalls Ahead of December High
AUD/USD is little changed from the start of the week after registering a fresh yearly high (0.6439), and the exchange rate may consolidate over the remainder of the month as it appears to be tracking the flattening slope in the 50-Day SMA (0.6299).
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
Nevertheless, data prints coming out of Australia may sway AUD/USD as the Reserve Bank of Australia (RBA) pledges to ‘rely upon the data and the evolving assessment of risks to guide its decisions,’ and the exchange rate may face increased volatility ahead of the next rate decision on May 20 as the Consumer Price Index (CPI) is anticipated to show sticky inflation.
Australia Economic Calendar
Australia’s CPI is expected to increase 0.8% in the first quarter of 2025 following the 0.2% rise during the previous period, and signs of persistent price growth may generate a bullish reaction in Australia Dollar as it encourages the RBA to further combat inflation.
At the same time, a weaker-than-expected CPI print may push the RBA to further unwind its restrictive policy, and indications of slowing price growth may drag on the Australian Dollar as Governor Michele Bullock and Co. acknowledge that ‘the continued decline in underlying inflation is welcome.’
With that said, the V-shape recovery in AUD/USD may unravel as it appears to be pulling back ahead of the December high (0.6515), but the exchange rate may continue to trade to fresh yearly highs should it defend the weekly low (0.6344).
AUD/USD Price Chart – Daily
-
AUD/USD seems to be reversing ahead of the December high (0.6515) as it struggles to close back above 0.6410 (50% Fibonacci extension), and failure to defend the weekly low (0.6344) may push the exchange rate towards 0.6240 (61.8% Fibonacci extension).
-
A break/close below the 0.6130 (23.6% Fibonacci retracement) to 0.6140 (23.6% Fibonacci extension) brings the 0.5990 (78.6% Fibonacci extension) to 0.6020 (38.2% Fibonacci extension) zone on the radar, with the next area of interest coming in around 0.5930 (61.8% Fibonacci extension).
-
At the same time, a breach above the weekly high (0.6439) may lead to a test of the December high (0.6515), with a break/close above the 0.6510 (38.2% Fibonacci retracement) to 0.6520 (38.2% Fibonacci extension) region opening up 0.6590 (38.2% Fibonacci extension).
Additional Market Outlooks
GBP/USD Rebound Vulnerable to Weak UK Retail Sales Report
Gold Price Coils Above 50-Day SMA
Euro Forecast: EUR/USD Reverses Ahead of November 2021 High
Canadian Dollar Forecast: USD/CAD Cracks November Low Ahead of Election
— Written by David Song, Senior Strategist
Follow on X at @DavidJSong
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.