Fresh Highs in Sight for AUD/JPY, AUD/USD

Fresh Highs in Sight for AUD/JPY, AUD/USD

Weekly Australian Dollar Technical Forecast: Fresh Highs in Sight for AUD/JPY, AUD/USD

Technical Forecast for the Australian Greenback: Bullish

  • It might not be probably the most seasonally pleasant time of yr for the Australian Dollar, however a prevailing ‘risk-on’ temper in international monetary markets is giving a bid to the commodity-linked foreign money.
  • Each AUD/JPY and AUD/USD charges are breaking larger out of current consolidations, suggesting that near-term technical construction is bullish.
  • The IG Client Sentiment Index suggests that the AUD-crosses have completely different biases.

Australian Greenback Charges Week in Evaluation

The primary week of Might proved a robust begin for the trio of commodity currencies, which had been the highest three performers among the many main currencies. Coming in first place, the Australian Greenback was capable of put up features in opposition to all of its main counterparts, with pairs like AUD/JPY (+1%) and AUD/USD (+1.66%) posting the strongest features. With the Reserve Financial institution of Australia now within the rearview mirror and a comparatively benign financial calendar due within the days forward, regardless that it may not be the most seasonally friendly time of year for the Aussie, a prevailing ‘risk-on’ temper in international monetary markets is giving a bid to the commodity-linked foreign money.

AUD/USD RATE TECHNICAL ANALYSIS: DAILY CHART (March 2020 to Might 2021) (CHART 1)

Weekly Australian Dollar Technical Forecast: Fresh Highs in Sight for AUD/JPY, AUD/USD

The final time we checked in on the AUD-crosses, it was famous that “AUD/USD’s uptrend from the March and November 2020 lows stays impaired, with the mid-March try larger failing to recapture the important thing trendline. However hope springs everlasting: it could be the case {that a} bullish falling wedge is taking form on the day by day timeframe, with help drawn from the early-January excessive and early-March low, and resistance drawn from the late-February excessive and mid-March excessive.”

And whereas AUD/USD charges did certainly commerce larger out of the bullish falling wedge, the month of April yielded little by means of advance or decline, organising what could also be interpreted as a bull flag. Accordingly, the breakout on the finish of the week means that the interval of consolidation has ended, and the prior interpretation of value motion coalescing right into a bull flag certainly appropriate. To this finish, AUD/USD charges are nonetheless within the throes of the aforementioned bullish falling wedge, which eyes a return to the yearly excessive at 0.8007.

IG Consumer Sentiment Index: AUD/USD RATE Forecast (Might 7, 2021) (Chart 2)

Weekly Australian Dollar Technical Forecast: Fresh Highs in Sight for AUD/JPY, AUD/USD

AUD/USD: Retail dealer information exhibits 35.39% of merchants are net-long with the ratio of merchants quick to lengthy at 1.83 to 1. The variety of merchants net-long is 26.69% decrease than yesterday and 27.00% decrease from final week, whereas the variety of merchants net-short is 0.39% decrease than yesterday and 14.74% larger from final week.

We sometimes take a contrarian view to crowd sentiment, and the actual fact merchants are net-short suggests AUD/USD costs might proceed to rise.

Merchants are additional net-short than yesterday and final week, and the mix of present sentiment and up to date adjustments offers us a stronger AUD/USD-bullish contrarian buying and selling bias.

AUD/JPY RATE TECHNICAL ANALYSIS: DAILY CHART (MARCH 2020 to Might 2021) (CHART 3)

Weekly Australian Dollar Technical Forecast: Fresh Highs in Sight for AUD/JPY, AUD/USD

AUD/JPY charges have maintained their uptrend from the March and November 2020 lows not like its AUD/USD brethren, however like its counterpart, a bullish falling wedge seems to be the predominant short-term sample that’s guiding value motion. With AUD/JPY charges above their day by day EMA envelope, which is in bullish sequential order, day by day MACD rising whereas above its sign line, and day by day Gradual Stochastics attaining overbought territory, bullish momentum is firming. A push to the yearly excessive at 85.45 (and past) is squarely in focus over the approaching days.

IG Consumer Sentiment Index: AUD/JPY Charge Forecast (Might 7, 2021) (Chart 4)

Weekly Australian Dollar Technical Forecast: Fresh Highs in Sight for AUD/JPY, AUD/USD

AUD/JPY: Retail dealer information exhibits 33.56% of merchants are net-long with the ratio of merchants quick to lengthy at 1.98 to 1. The variety of merchants net-long is 5.06% decrease than yesterday and eight.70% larger from final week, whereas the variety of merchants net-short is 5.71% decrease than yesterday and 6.60% decrease from final week.

We sometimes take a contrarian view to crowd sentiment, and the actual fact merchants are net-short suggests AUD/JPY costs might proceed to rise.

But merchants are much less net-short than yesterday and in contrast with final week. Latest adjustments in sentiment warn that the present AUD/JPY value development might quickly reverse decrease regardless of the actual fact merchants stay net-short.

CFTC COT Australian Greenback Futures Positioning (Might 7, 2020 to Might 7, 2021) (Chart 5)

Weekly Australian Dollar Technical Forecast: Fresh Highs in Sight for AUD/JPY, AUD/USD

Lastly, a consideration of positioning within the futures market. According to the CFTC’s COT for the week ended Might 4, speculators flipped their Australian Greenback positioning to net-long with 1,476 contracts, a shift from the 1,410 net-quick contracts held within the week prior. Contemplating how benign positioning is sooner or later market, there’s ample room for the Australian Greenback to embark on a development with out threat of ‘overcrowding’ within the short-term.

— Written by Christopher Vecchio, CFA, Senior Forex Strategist

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