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AUD/USD Forecast: Charts Favor Rally To 0.80

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The AUD/USD looks set to scale 0.80 soon, according to the technical charts.

As of writing, the spot is solidly bid at 0.7873, having closed higher at a 13-day high on Friday, tracking risk-on action in the US stocks. Also, helping the Aussie dollar is Trump's decision to exempt Australia from the tariff plan.

Daily Chart

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Friday's close confirmed a falling wedge (bullish) reversal -  a continuation pattern, which indicates the rally from the December low of 0.7501 has resumed.

Also, the 5-day moving average (MA) and the 10-day MA are trending north, indicating bullish setup. Further, the relative strength index (RSI) has turned bullish (has moved above 50.00 and rising).

So, the pair will likely beat resistance at 0.7895 (50-day MA) and move to 0.80 in the short-term. On the downside, only an end of the day close below the 10-day MA (now seen at 0.7798) would signal bullish  invalidation while a close below 0.7744 - 61.8% Fib R of Dec-Jan rally - would allow a sell-off to 0.7532 (Nov. 21 low) and .7501 (December low).

What could derail the rally?

If the US CPI (due later this week) beats estimates, the markets will likely start pricing-in the possibility of Fed revising higher its dot plot to four 2018 rate hikes at the forthcoming meeting in March. In this scenario, the American dollar could appreciate across the board. Further, the sharp rise in the treasury yields and the resulting risk aversion may not bode well for the Aussie dollar.

 

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Posted-In: FXStreetNews Forex Treasuries Markets

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