Currencies Outlook: AUD/USD and GBP/AUD
The Australian dollar (AUD) has shown a faint attempt to recover against the US dollar (USD) this week, yet the longer-term trend remains bearish. The AUD/USD pair has been trading within a downtrend channel since mid-2021, with several failed attempts to break above the 0.74 resistance level. As of now, the pair is hovering near the 0.725 mark, with the Relative Strength Index (RSI) indicating a neutral trend.
AUD/USD Technical Analysis
From a technical standpoint, the bearish trend in AUD/USD is further reinforced by the Moving Average Convergence Divergence (MACD) indicator. The MACD line is below the signal line, indicating a bearish trend, and the histogram shows a consistent negative momentum. A potential support level for the pair can be found at the 0.715 mark, which was a previous resistance level. A break below this level could lead to a test of the 0.70 psychological level.
Implications for GBP/AUD
The bearish trend in AUD/USD could have implications for the Australian dollar against the British pound (GBP). The GBP/AUD pair has been trading within a sideways channel since the beginning of the year, with resistance at the 1.865 level and support at the 1.825 level. However, a potential break below the support level in AUD/USD could lead to a test of the 1.82 level in GBP/AUD, which was the 2020 high.
Cycle Top and Pullback
It’s important to note that the bearish trend in AUD/USD does not necessarily mean that the Australian dollar is doomed to decline indefinitely. The pair could be in the process of a cycle top and pullback, where the currency experiences a temporary decline before resuming its uptrend. However, to confirm this theory, we would need to see a bullish reversal pattern, such as a hammer or a bullish engulfing pattern, followed by a sustained recovery.
Impact on Individuals
For individuals holding Australian dollars or planning to travel to Australia, the bearish trend in AUD/USD could lead to decreased purchasing power when converting their currency to US dollars. However, it’s important to remember that currency markets are complex and subject to numerous factors, and short-term trends are not always indicative of long-term trends.
Impact on the World
The bearish trend in AUD/USD could have implications for global trade and commodities. Australia is a major exporter of commodities such as coal, iron ore, and natural gas. A weaker Australian dollar could make these commodities more attractive to foreign buyers, leading to increased demand and higher prices. On the other hand, it could also make Australian imports more expensive, leading to decreased demand and potential inflationary pressures.
Conclusion
In conclusion, the Australian dollar has been in a bearish trend against the US dollar, with the potential for further declines towards the 0.70 psychological level. This trend could have implications for the Australian dollar against other currencies, such as the British pound, and could impact individuals and the global economy in various ways. However, it’s important to remember that currency markets are complex and subject to numerous factors, and short-term trends are not always indicative of long-term trends.
- AUD/USD has been in a bearish trend since mid-2021
- The pair is currently hovering near the 0.725 mark
- The MACD indicator shows a bearish trend with negative momentum
- A potential support level for AUD/USD is at 0.715
- A break below this level could lead to a test of the 0.70 level
- A potential break below AUD/USD support could lead to a test of GBP/AUD 2020 highs
- The bearish trend in AUD/USD could impact individuals and the global economy in various ways
