AUD/USD Forex Signal: Bulls Eyeing YTD High at 0.7822

Crispus Nyaga

The pair may continue rising as bulls aim for the year-to-date high of 0.7822. 

Bullish case

  • Buy the AUD/USD hoping the trend will continue.

  • Have a take-profit at 0.7822 (YTD high).

  • Add a take-profit at 0.7700.

Bearish case

  • Set a sell-stop at 0.7700 (psychological level and the upper side of the descending channel).

  • Add a take-profit at 0.7650 and stop-loss at 0.7760.

The AUD/USD has risen to a two-week high, helped by a relatively weaker US dollar and high commodity prices. It is trading at 0.7741, which is 2.35% above last week’s low of 0.7563.

Weak US dollar Helps Aussie

The common theme this week has been about the overall weak US dollar. The US Dollar Index has dropped in the past four consecutive days and is trading at $90.38.

After rallying for several weeks, the US dollar reversed last week when the US released weak jobs numbers. While the unemployment rate fell and wages rose, the country managed to add about 40,000 new jobs in January. This means that the country has a long way to go to recover more than 20 million jobs that were lost last year.

As a result, the government is attempting to provide a $1.9 trillion stimulus package in addition to the $900 billion passed early this year. The impact of this stimulus will be a widening budget deficit and government debt that stands at more than $27 trillion. The trade deficit will also likely widen as Americans use these funds to shop foreign-made goods.

The AUD/USD will react to the US Consumer Price Index (CPI) that will come out in the afternoon today. Economists expect the data to show that the headline inflation rose by 1.5% in January. Earlier today, we received relatively weak inflation numbers from China.

The AUD/USD has also been helped by the overall higher commodity prices. The Bloomberg Commodity Index (BCOM) has risen to a multi-month high of $83.80. Commodities like crude oil, iron ore, and copper have all been on an uptrend. This is an important figure, since the Aussie is often viewed as a proxy for commodity prices.

AUD/USD Technical Outlook

The four-hour chart shows that the AUD/USD price has been in an uptrend in the past few days. And yesterday, the pair managed to move above the previous descending channel shown in blue. It has also moved above the Ichimoku cloud and the 25-day moving averages. Therefore, the pair may continue rising as bulls aim for the year-to-date high of 0.7822. To do this, bulls will need to defend the important psychological level of 0.7800.

AUD/USD chart

Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.