This article explores the technical outlook for the Australian dollar, focusing primarily on AUD/USD and AUD/JPY. For a more comprehensive perspective, access the fundamental forecast by downloading the complete second-quarter trading guide.
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AUD/USD Q2 TECHNICAL OUTLOOK
AUD/USD remains in a long-term or ‘secular’ downtrend channel which has been in place since mid-February 2021. The base of this band has been very well respected, to the point where the relatively brief fall below it in the second half of 2022 looks like an aberration.
The pair has support at the fourth Fibonacci retracement of the fast rise to those 2021 peaks from the lows of March 2020. That comes in at 0.6468.
It’s notable that any return to the 0.70 handle or above this year would very likely see this downtrend broken. If this can occur durably it would clearly be significant for the Aussie. While a rise to those levels looks unlikely in the coming quarter, bulls may be able to build a base from which they can attempt it later in the year.
AUD/USD Weekly Chart
Source: TradingView, Prepared by David Cottle
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AUD/JPY Q2 TECHNICAL OUTLOOK
AUD/JPY has been rising quite consistently for the past two years, with that uptrend itself only an extension of the long rise seen since March 2020.
That uptrend has now taken the Aussie to highs not seen against its Japanese rival for more than nine years. AUD/JPY has also nosed above an admittedly very broad trading band which had previously held since April 2022.
If AUD bulls can sustain these levels, then the next key upside target will be the high of mid-November 2014, at 102.72. Still, gains have been rapid and some pause for consolidation may be seen in the near-term, even if they keep AUD/JPY in the upper half of its former trading range.
The Bank of Japan rocked markets in March by finally stepping away from its zero-interest rate policy. However, as the Australian Dollar’s continuing rise shows, Japanese yields remain unattractive by comparison with peer currencies’ and will continue to do so for some time.
AUD/JPY Weekly Chart
Source: TradingView, Prepared by David Cottle
