- Yet another week of recession worries saw the risk-sensitive pair plunging.
- Investors are awaiting US nonfarm payroll data.
- The price is making lower lows in the charts.
Next week’s AUD/USD weekly forecast is bearish as the pair is weighed down by dollar strength amid recession fears.
Ups and downs of AUD/USD
Australia’s retail sales rose higher than expected in May, but despite this good news, the pair ended the week lower as the dollar gained over recession fears. Investors paid more attention to the macro-fundamentals than to domestic data.
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Next week’s key event for AUD/USD
Next week will be volatile for US dollar pairs as markets expect the release of the nonfarm payrolls for June. This data will give a clear picture of the US jobs market, informing the Federal Reserve on their monetary policy. A lower-than-expected value would show a slowdown in the economy. A higher-than-expected value would indicate a growing economy that would be able to survive a tighter monetary policy and could lead to a collapse in AUD/USD.
Investors also expect to look into the FOMC meeting minutes, which might give more insight into the future of monetary policy.
It will also be a big week for the Australian dollar as the Reserve Bank of Australia is expected to raise interest rates at Tuesday’s meeting. Anything is possible after they surprised investors in their last meeting, and AUD/USD might be in for a lot of volatility.
AUD/USD weekly technical forecast: A break below 0.68311 in the cards
The daily chart shows the price trading below the 22-SMA, a sign that bears are in charge. It is also clear from the charts that there is a lot of bearish momentum, as seen in how the RSI trades well below the 50 level.
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The price attempted a break below the 12 May lows at 0.68311 and failed to close well below this level. It was, however, able to create a lower low and might push lower in the coming week. A clean break below this level would lower the price to 0.67008, which acted as support in early February 2020. However, if the price fails to trade below the 12 May lows, we might see bulls come in and take the price back to the 22-SMA.
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