AUD/USD, AUD/JPY forecast: AUD on track for tightest weekly range this century

Australian employment data for January is released at 11:30 Sydney. But it will likely take one heck of a miss to wake AUD/USD up from its lull. But given the general robustness of Australia’s employment market, a big miss seems unlikely although it could support the Aussie for a cheeky bid if it continues to pump out the goods.

With a high-to-low range of just 0.62%, AUD/USD is on track for its least volatile week this century. Which is quite remarkable given it lands on the week of an RBA cut rates by 25bp and supposedly wrong-footed some traders hoping for a more dovish outcome. For now, it seems the Australian dollar is simply happy to not be contending with tariff headlines.

Economic events in focus (AEDT)

• 09:00 – Fed member Jefferson speaks
• 10:50 – JP foreign bond, stock purchases
• 11:30 – AU employment change
• 12:00 – CN PBoC loan prime rate
• 00:30 – US jobless claims
• 01:35 – US Fed Goolsbee speaks

AUD/USD technical analysis:

The tight range of this week is accentuated by the two prior bullish weeks, amid its tariff-relief rebound. Yet resistance has been met around the August low (my original target) and the VAL (value-area low) of its Q4 decline. The 20-week EMA is also at 0.6371 to potentially cap any runaway gains.

With that said, a bull flag is apparent on the 4-hour chart, which garners consideration given the strong rally leading into it. With odds favouring an ok or decent set of jobs figures, a rising AU-US 2-year spread and a bullish consolidation on AUD/USD, dips remain preferred over the near-term. Even if its upside could be capped by resistance for now.

AUD/JPY technical analysis:

A potential bull flag is forming on the daily chart of AUD/JPY, although it bends a few classical rules. Ideally, we want to see such patterns during strong uptrends. However, I am willing to waver that ideal scenario on the basis that we saw a false break of an elongated bullish pinbar and of a sharp reversal higher. Furthermore, I am willing to forego the usual projected flag target due to bearish price action on higher timeframes. But it could still allow for a near-term bullish setup.

Prices are holding above the 10-day EMA and weekly pivot point. But we should be on guard for another stab lower over the near-term, in which case bulls could look for a false break (and reversal back above) the HVN (high-volume node) at 95.88.

As stated above, an ok-or-better employment report could help with a cheeky bid. And I am looking for conservative upside targets at this stage of the 97 handle, highs around 97.20 – a break above which brings the weekly R1 pivot into focus near the 89 handle.

-- Written by Matt Simpson

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