Australian Dollar, AUD/USD, AUD/JPY, Time Cycle Analysis – Talking Points:
- Time-cycle analysis suggests the Australian Dollar is poised to outperform its haven-associated counterparts after breaching key resistance.
- AUD/USD eyeing a retest of the yearly high after hold above pivotal support.
- AUD/JPY gearing up to extend its rebound from the September low, as price hovers constructively above the yearly open.
The Australian Dollar appears poised to continue outperforming its haven-associated counterparts as time-cycle analysis suggests a cyclical upturn is in the offing.
AUD/USD Monthly Chart – Cyclical Upturn Afoot?
AUD/USD monthly chart created using TradingView
As mentioned in previous reports, the chart above highlights the cyclical nature seen in AUD/USD rates over the past 24 years, with the currency pair largely adhering to what appears to be an 8-year rotation. It has set significant bottoms in early 2001, late 2008 and 2016.
Recent price action looks strikingly similar to that seen early in the bullish cycle ignited in September 2001 and could be indicative of further upside for AUD/USD, given price has cleared the downtrend extending from the 2013 high (1.0598) and remains perched constructively above key support at the 78.6% Fibonacci (0.7092).
Moreover, with the RSI holding firmly above its neutral midpoint and eyeing a break above the downtrend extending from the 2004 extremes – in a similar fashion to its development in late 2002 – a cyclical upturn seems to be afoot.
To that end, the trade-sensitive currency could be poised to substantially extend its recent 32% surge against its haven-associated counterpart, with cycle analysis suggesting AUD/USD may rise as much 50% from current levels to eventually peak in late 2025.
AUD/USD Daily Chart – Ascending Channel Nurturing Uptrend
AUD/USD daily chart created using TradingView
Zooming into a daily chart reinforces the bullish outlook depicted on higher timeframes, as AUD/USD rates clamber back above the 61.8% Fibonacci (0.7131) and all four moving averages.
With the RSI tracking above its neutral midpoint and a bullish cross-over taking place on the MACD indicator, the path of least resistance seems skewed to the topside.
A daily close above the psychologically imposing 0.7300 mark would probably signal the resumption of the primary uptrend and bring confluent resistance at the September high (0.7413) and Ascending Channel median line into focus.
Conversely, a break back below the trend-defining 50-DMA (0.7161) could ignite a more substantial correction, with a breach of key support at the 61.8% Fibonacci (0.7131) needed to invalidate the bullish continuation pattern and carve a path for price to retest the September low (0.7006).
| Change in | Longs | Shorts | OI |
| Daily | 5% | 2% | 3% |
| Weekly | -7% | 10% | 3% |
AUD/JPY Daily Chart – 21-DMA Steering Price Higher
AUD/JPY daily chart created using TradingView
The AUD/JPY exchange rate also appears poised to extend its rebound higher, as price jumps back above psychological resistance at the 76.00 mark and the yearly open (76.24).
The development of the RSI and MACD indicators hints at swelling bullish momentum and suggests that the path of least resistance for AUD/JPY rates is higher.
A retest of the August high (78.46) looks likely in the near-term if AUD/JPY can stay constructively positioned above the 50-DMA (75.77), with a daily close above the 77.00 mark probably igniting a continuation of the uptrend extending from the March doldrums.
On the other hand, a break back below the yearly open 76.24 could lead to a retest of the September low (73.97), if confluent support at the June 16 swing-high (75.08) and 100-DMA gives way.
— Written by Daniel Moss, Analyst for DailyFX
Follow me on Twitter @DanielGMoss
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