AUDCHF Consolidating Within Bull Trend

AUDCHF has been on a strong rally since the 2020 lows recorded during the pandemic. This year alone the pair has risen almost 8% as a better domestic outlook for Australia and better global risk backdrop have helped the high-yielding Aussie gain over the safe-haven franc. The pair is now settling within a triangular pattern between the rising trend line from last year’s lows and the local bearish trend line from 2021 highs.

For now, the outlook remains bullish with the current consolidation pattern offering breakout opportunities on a move above the .7259 level highs. The RBA has been a lot more optimistic about the Australian economy of late. With Australia having been one of the most effective countries in controlling the virus, the country has largely returned to normal.

Though the RBA has reiterated its view that rates will remain on hold until at least 2024, the upside risks in the outlook are likely to keep AUD supported in the near term. Meanwhile, improvements in the global risk backdrop linked to vaccination successes and reopening optimism mean that further downside is likely to be seen in the near term.

Key Data to Watch

The release of the RBA’s Financial Stability Report this evening will be the main focus. While there are dovish risks for the Aussie around the re-heating occurring in the Aussie housing market currently, any comments around this issue are unlikely to upstage optimism over the Aussie COVID-recovery. While AUD could pop lower in the near term, this would likely be a false break and would expect support into the .6931 level at least.

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