Forex - AUD/USD weekly outlook: March 23 - 27

Investing.com - The Australian dollar rallied more than 1% against its U.S. counterpart on Friday, as expectations that U.S. interest rates will rise at a slower pace than previously thought weighed on the greenback.

AUD/USD jumped 1.63% on Friday to settle at 0.7774 by close of trade. For the week, the pair rose 1.79%, snapping a three-week losing streak.

The dollar tumbled after the Federal Reserve downgraded its forecasts for growth and inflation earlier in the week and lowered its interest rate projections, prompting investors to push back expectations on the timing and pace of future rate increases.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tumbled 1.4% on Friday to end at 98.05, moving further away from a 12-year high of 100.78 hit on March 13.

For the week, the dollar index lost 2.53%, the biggest weekly decline since October 2011.

Despite the past week’s losses, the dollar looks likely to continue to strengthen, with the Fed still expected to raise interest rates ahead of other central banks.

Minutes of the Reserve Bank of Australia's latest meeting released earlier in the week showed that the central bank sees an advantage in waiting for more economic data before lowering interest rates further.

In the week ahead, investors will be focusing on Tuesday’s U.S. inflation report after Fed Chair Janet Yellen warned last week that the stronger dollar was pushing down consumer prices.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, March 23

The U.S. is to release a report on existing home sales.

Tuesday, March 24

China is to release the preliminary reading of the HSBC (LONDON:HSBA) manufacturing index. The Asian nation is Australia's largest trade partner.

The U.S. is to release data on consumer price inflation and new home sales.

Wednesday, March 25

The RBA is to publish its Financial Stability Review, which contains an assessment of conditions in the financial system and potential risks to financial stability.

The U.S. is to publish data on durable goods orders.

Thursday, March 26

The U.S. is to release weekly data on initial jobless claims.

Friday, March 27

The U.S. is to round up the week with final data on fourth quarter economic growth and the revised reading of the University of Michigan consumer sentiment index.