Is AUDUSD Heading For A Breakout?
Dollar Dips On Ceasefire News
USD is sinking across the board today in FX markets as traders react to news of the eleventh-hour ceasefire deal agreed last night between the US and Iran. Risk currencies have been the biggest winner, buoyed by rising commodities and stock prices though moves in CAD have been a little more tempered given the plunge lower we’ve seen in oil prices. Antipodean currencies are showing strongly today, however, with AUDUSD spiking almost 2% higher on the news.
Hawkish RBA Expectations
AUD is well placed to benefit from a period of USD weakness given the hawkish RBA expectations held by traders on the back of the recent uptick in inflation which prompted a fresh rate hike from the bank and projections of more to come. The bank warned that inflationary risks linked to elevated energy prices from the Iran war, as well as robust jobs strength, would likely require further tightening from the bank. Indeed, Goldman Sachs recently raised is price forecast for AUDUSD over 3,6- and 12-month horizons, citing hawkish RBA risk as a key factor. If the US/Iran ceasefire holds and negotiations lead towards a proper peace deal, USD should correct much deeper, with AUDSD poised to breakout higher in coming weeks/months accordingly.
Technical Views
AUDUSD
The rally in the Aussie has seen price breaking back above the .6942 level. With momentum studies bullish, focus is on a continuation higher with .7153 the initial resistance to note ahead of .7285 and the bull channel highs.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.