AUD/USD posts lowest weekly close since December
- AUD among worst performers of the week after sharp 2-day side.
- US Dollar gains momentum on Friday ahead of FOMC meeting.
AUD/USD dropped sharply during the last two days of the week, losing more than 150 pips. On Thursday started to retreat after being rejected from above 0.7900 and accelerated significantly, breaking key short-term technical levels.
A weak Australian dollar (together with the Canadian dollar, the worst performer among majors) pushed the pair to the downside. On Friday the US Dollar rallied across the board. The US Dollar Index reached on Friday a 3-day high at 90.11 on the back of US economic data and higher US yields.
AUD/USD losing support
The pair broke on Thursday an uptrend line and on Friday consolidated below the March lows. The slide continued during Friday’s US session. It bottomed at 0.7710 the lowest level since December 26.
AUD/USD dropped almost 200 pips from Wednesday’s high making a reversal. The pair appears to be looking for support. The immediate candidate seems to be the 0.7700 area followed by 0.7630/40. The short-term outlook points to the downside. A recovery back above 0.7830/40 could remove bearish pressures.
Volatility is likely to remain elevated taking into account what the economic calendar shows for next week and recent price developments.
Week ahead
In the US, the key event next week will be the Federal Reserve policy meeting (March 20-21). A rate hike is expected. Updated economic projections from FOMC members will be released with analysts looking at signals about how many rate hikes could take place during the current year.
In Australia, key reports next week include RBA minutes (Tuesday) and the jobs report (Thursday).
Also, focus will remain on risks of a global trade war with more protectionist measures expected to be announced by US President Trump.