The Aussie Rebounded After a Huge Drop in March: Will It Continue Upward?
- Breaking the level of 0.6440 might cause the AUD/USD to rally upward
- AUD/USD has rebound after reaching the lowest low since 2008
- Decisive major news for the Aussie next week
The continent of Australia has not been as affected by COVID-19 as severely as other continents around the world.
Hence, the AUD/USD pair has not been facing as many bad news stories as the US Dollar, EURO, and other leading currencies.
Technical analysis might give us an idea of how the Aussie will move this week.
Monthly Time Frame:
The Australian dollar has been depreciating against the US dollar since 2011.
A downtrend as shown below on the chart that was stopped by a support (red line) in April.
A critical level for the Aussie is 0.6080, which will decide whether the pair will continue downward or rebound to gain some power in the next few weeks.
For AUD to consider a reversal, the price should close above the downtrend (white line), so the price has room to start appreciating and push upward.
4-Hr Time Frame:
Zooming in to see what is happening on a shorter time frame.
The first thing to notice is a significant divergence between the RSI and the price of AUD/USD.
The RSI values are displaying higher highs while the price of Aussie is showing a lower high.
This is called a hidden divergence, which indicates a continuation of the trend. In this case, the primary trend is downward, so most probably the price will depreciate next week.
The pair could not close above the white downtrend (white) which signals that there is no momentum for bulls to take the lead and push the price upward.
To know a change in the direction of the price will occur, the Aussie should breakout the white downtrend and close above the green line (resistance).
The latest studies regarding the pandemic in Australia show that out of 6,551 confirmed cases, 72 people have died.
It’s a shallow death rate when compared to other countries in the world.
This could be one of the reasons why the Aussie has been so much more powerful than the greenback.
As well, the AUD/USD jumped in the last few days amid released reports that show a promising vaccine under trial in Australia.
“I am actually quite optimistic we will have results at least – whether the results are good or not so good – from many clinical trials in the next few weeks,”
Said Sharon Lewin, director of the Peter Doherty Institute for Infection and Immunity.
Next week, the governor Philip Lowe will give a speech about how the central bank is tackling the slow economic along with coronavirus spread.
Late in March, the Australian central bank already began to buy back loans, 5 billion dollars a day as part of its quantitative easing strategy.
With Trump pushing for a reopening of the US economy, will it give a chance for the greenback to appreciate against the Aussie dollar?