AUD 1Q Forecasts: Key Market Tendencies to Look ahead to in 2021 FX Market

AUD 1Q Forecasts: Key Market Tendencies to Look ahead to in 2021 FX Market – Lengthy AUD/USD and AUD/JPY

AUD/USD Weekly Chart

Chart ready by David Tune, created with TradingView

AUD/USD has staged a V-shape restoration in 2020, with the change price taking out the 2019 excessive (0.7295) within the second half of the yr. Including weight to the drive, the change furthered its bullish lean with a get away from a bull-flag formation seen late within the yr on a weekly timeframe.

Consequently, AUD/USD trades above the 200-Week SMA (0.7237) for the primary time in over two years, with the Relative Power Index (RSI) highlighting an analogous dynamic because the indicator flirts with overbought territory for the primary time since 2011. Wanting forward, the Australian Greenback might proceed to outperform towards its US counterpart as the continuation sample positive aspects traction forward of 2021. Alternatively key elementary traits might add affect to AUD/USD subsequent yr because the Buck broadly displays an inverse relationship with investor confidence.

AUD/JPY Weekly Chart

Chart ready by David Tune, created with TradingView

The development in investor confidence following the unprecedented steps taken by financial in addition to fiscal authorities not too long ago has additionally spurred a restoration in carry commerce curiosity. That sits properly with an inverse head-and-shoulders formation rising in AUD/JPY – even when charges are very low.

In flip, the correction from the 2020 excessive (78.46) might change into an exhaustion within the V-shape restoration moderately than a change in market conduct as AUD/JPY breaks out of the descending channel carried over from the third quarter. There may be additionally a bull flag formation showing to unfold forward of 2021 because the Relative Power Index (RSI) recovers from its lowest studying since Could. It stays to be seen if the RSI will mirror an excessive studying because the indicator has held under 70 since 2013, however a transfer into overbought territory is prone to be accompanied by an extra appreciation in AUD/JPY because the bullish momentum gathers tempo.