- Summary:
- The AUD/USD pair struggles at the neckline of a head and shoulders pattern and a move below the previous lower low puts pressure for a trip to 0.7350.
The AUD/USD pair shows signs of exhaustion. The pair consolidates on the right shoulder of a head and shoulders pattern and looks vulnerable to more downside.
This is one of the currency pairs that benefited the most from the stock market rally seen since the start of November last year. Higher equities fueled a move higher in the Aussie pair, and commodities markets rally helped as well.
Yet, the Reserve Bank of Australia made it clear that its intentions of controlling the yield curve are serious. As such, it expanded its bond-buying program and smashed the yields as a consequence. In other words, the AUD/USD remains elevated for what the central bank does, so the bias from a fundamental perspective is bearish.
AUD/USD Technical Analysis
The technical picture reveals a head and shoulders pattern that works on its right shoulder at the moment. We may still see some consolidation, but the focus now sits on a move below the previous lower low. On such a move, the bears are in control and the head and shoulders’ target at 0.7350 comes into play. As such, bears may want to wait for a break below 0.7630 before going short for 0.7350. The 0.7750 should act as an invalidation level.
AUD/USD Price Forecast
