BNP Paribas: Long AUD/USD Targeting 0.7000

BNP Paribas Research likes long AUD/USD with a target at 0.7000, and a stop at 0.6550.

“With risk premia at still-elevated levels, bullish seasonal patterns in early April and bearish USD momentum building, we favour adding long AUDUSD,” BNPP notes.

“AUD positioning is neutral according to BNP Paribas FX Positioning Analysis and the currency has suffered as a result of the Reserve Bank of Australia being a laggard in raising rates,” BNPP adds. 

Seasonal Pattern

Seasonal patterns show that, on average, the AUDUSD makes its biggest gains in the month of April.

AUDUSD Daily Chart

The pair is testing the main trend line, as a rebound from the levels will direct the upward movement to the resistance zone – 200MA and 38.2 fibo at 0.6750/70. A break of the resistance will send the quotes back above the tramline and levels at the chorionic resistance and 23.6 fibo in the 0.6900/30 zone.

Alternatively:

A break of the current long trend will trigger the activation of a death cross and flag formation, sending the price to a new downward move towards 0.64

FX Forecast Distribution

The distribution of bank traders’ expectations also shows the largest spread of forecast levels for the cross at 0.70.

Long-term expectations reinforce the long trend at 0.71.