**Australian Dollar Forecast: AUD/USD Breaks Out While AUD/JPY Faces Mean Reversion**
*Original insights attributed to Rich Dvorak at FOREX.com. Supplemental analysis incorporates additional market context and relevant third-party sources.*
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**Overview**
The Australian dollar (AUD) has been a focal point in foreign exchange markets recently, owing to pronounced volatility in both its USD (US dollar) and JPY (Japanese yen) pairs. This article provides a comprehensive analysis of the shifting dynamics affecting AUD/USD and AUD/JPY, considering both technical and fundamental drivers.
## AUD/USD: Bullish Momentum Breaks Resistance
### Recent AUD/USD Performance
The Australian dollar has staged a sharp rise against the US dollar, extending a bullish breakout that has captured the attention of both technical traders and fundamental analysts.
Key factors influencing this movement include:
– **Improved global risk appetite**: As global stock markets rebound, risk-sensitive currencies like the AUD tend to outperform.
– **Moderation in US interest rate hike expectations**: Softer US economic data and signs of peaking inflation have led investors to reassess the trajectory for Federal Reserve monetary tightening.
– **Dovish tilt in Fed communication**: Recent Federal Reserve statements have reinforced beliefs that the US central bank is nearing the end of its aggressive rate hike cycle.
#### Technical Analysis
– AUD/USD has surged past a key technical barrier near the 0.6700 level, signaling a confirmed upside breakout.
– A volume spike in trading activity has accompanied the move, underscoring its technical conviction.
– Moving averages (such as the 50-day and 200-day) are now positioned for a potential golden cross, further affirming the bullish case.
– The next resistance levels to watch include 0.6800 and 0.6880, while support sits around 0.6650.
#### Fundamental Drivers
– **Commodity prices**: As a major exporter, Australia’s economy and currency are highly sensitive to global commodity price swings. Recent strength in metals and energy prices has benefited the AUD.
– **Chinese economic outlook**: China is Australia’s largest trading partner. The Chinese government’s support for its post-pandemic economic recovery has improved export prospects for Australia, supporting the AUD.
– **RBA policy expectations**: The Reserve Bank of Australia, following its June meeting, has hinted at patience, suggesting rates are likely to remain unchanged in the near future unless inflation surprises to the upside.
### Short-Term and Medium-Term Outlook
– In the near term, AUD/USD could consolidate gains between 0.6640 and 0.6800 as traders digest recent moves.
– Medium-term prospects rest on:
– Fed rate path clarity
– Evolution of Chinese demand
– Australian economic data, such as employment and inflation reports
## AUD/JPY: Mean Reversion Signals Growing
The AUD/JPY pair, which tracks the Australian dollar versus the Japanese yen, has also seen substantial volatility, but the market
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