AUD/USD Forecast: Aussie recovers after testing levels under 0.6500, bias remains bearish
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CLAIM OFFERAUD/USD Current Price: 0.6538
- Australian Dollar under pressure on weak Chinese data and lower commodity prices.
- US Dollar benefits from risk aversion, ahead of Thursday's CPI.
- The AUD/USD is under pressure but managed to recover above 0.6500.
The AUD/USD lost ground, affected by risk aversion and lower commodity prices. Chinese data weighed on the Aussie, while the US Dollar benefited ahead of Thursday's inflation data. The pair bottomed at 0.6496 and then rebounded as US stocks trimmed losses.
The Chinese trade data disappointed markets, showing a 14.5% decline in exports in July compared to a year ago, which was steeper than the expected 12.5% decline. Imports tumbled 12.4%, more than the anticipated 5% slump. These numbers reflected weaker domestic demand and complicated external demand.
Data released on Tuesday showed a decline in the Westpac Consumer Confidence Index in August by 0.4%. The National Australia Bank's July Business Survey showed mixed numbers, with a decline in the Conditions index from 11 to 10 (above the market consensus of 8) and a rebound in the Confidence index from -1 (revised from 0) to 2, surpassing the expected -1. Price indicators in the survey were in line with a 5% inflation.
No Australian data is due on Wednesday, and the focus during the Asian session will be on the Chinese Consumer Price Index for July, which is expected to show another monthly decline in the index.
The US Dollar rose on Tuesday, boosted by risk aversion and ahead of Thursday's US Consumer Price Index. Federal Reserve officials are offering mixed perspectives. Fed Governor Michelle Bowman stated that "additional increases will likely be needed to lower inflation," while Harker mentioned that they "may be at the point where we can be patient and hold rates steady." The most powerful words will come from the data, starting with the CPI on Thursday. Before the next FOMC meeting, there is still a long way to go, including the August CPI.
The AUD/USD will likely remain under pressure if markets continue to be cautious, considering the weakened Chinese outlook and the impact of US bank downgrades. Additionally, the decline in commodity prices weighs on the pair. Given this context, it remains vulnerable to the downside.
AUD/USD short-term technical outlook
The AUD/USD reached levels below 0.6500 but managed to close above that area. The rebound could indicate some signs of consolidation, but risks still lean towards the downside. In the daily chart, the price remains well below key Simple Moving Averages (SMAs), and technical indicators point to further downside potential.
On the 4-hour chart, the AUD/USD is bouncing off lows, and technical indicators suggest that the recovery could continue. The next resistance area is located at 0.6555/60, which is a horizontal level and the 20-SMA (Simple Moving Average). If the pair rises above this level, it would gain support and alleviate bearish pressure. On the flip side, a decline below 0.6520 would likely lead to another test of 0.6500. A further decline would expose the 2023 low around 0.6460.
Support levels: 0.6520 0.6495 0.6460
Resistance levels: 0.6560 0.6590 0.6620
AUD/USD Current Price: 0.6538
- Australian Dollar under pressure on weak Chinese data and lower commodity prices.
- US Dollar benefits from risk aversion, ahead of Thursday's CPI.
- The AUD/USD is under pressure but managed to recover above 0.6500.
The AUD/USD lost ground, affected by risk aversion and lower commodity prices. Chinese data weighed on the Aussie, while the US Dollar benefited ahead of Thursday's inflation data. The pair bottomed at 0.6496 and then rebounded as US stocks trimmed losses.
The Chinese trade data disappointed markets, showing a 14.5% decline in exports in July compared to a year ago, which was steeper than the expected 12.5% decline. Imports tumbled 12.4%, more than the anticipated 5% slump. These numbers reflected weaker domestic demand and complicated external demand.
Data released on Tuesday showed a decline in the Westpac Consumer Confidence Index in August by 0.4%. The National Australia Bank's July Business Survey showed mixed numbers, with a decline in the Conditions index from 11 to 10 (above the market consensus of 8) and a rebound in the Confidence index from -1 (revised from 0) to 2, surpassing the expected -1. Price indicators in the survey were in line with a 5% inflation.
No Australian data is due on Wednesday, and the focus during the Asian session will be on the Chinese Consumer Price Index for July, which is expected to show another monthly decline in the index.
The US Dollar rose on Tuesday, boosted by risk aversion and ahead of Thursday's US Consumer Price Index. Federal Reserve officials are offering mixed perspectives. Fed Governor Michelle Bowman stated that "additional increases will likely be needed to lower inflation," while Harker mentioned that they "may be at the point where we can be patient and hold rates steady." The most powerful words will come from the data, starting with the CPI on Thursday. Before the next FOMC meeting, there is still a long way to go, including the August CPI.
The AUD/USD will likely remain under pressure if markets continue to be cautious, considering the weakened Chinese outlook and the impact of US bank downgrades. Additionally, the decline in commodity prices weighs on the pair. Given this context, it remains vulnerable to the downside.
AUD/USD short-term technical outlook
The AUD/USD reached levels below 0.6500 but managed to close above that area. The rebound could indicate some signs of consolidation, but risks still lean towards the downside. In the daily chart, the price remains well below key Simple Moving Averages (SMAs), and technical indicators point to further downside potential.
On the 4-hour chart, the AUD/USD is bouncing off lows, and technical indicators suggest that the recovery could continue. The next resistance area is located at 0.6555/60, which is a horizontal level and the 20-SMA (Simple Moving Average). If the pair rises above this level, it would gain support and alleviate bearish pressure. On the flip side, a decline below 0.6520 would likely lead to another test of 0.6500. A further decline would expose the 2023 low around 0.6460.
Support levels: 0.6520 0.6495 0.6460
Resistance levels: 0.6560 0.6590 0.6620
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