AUD/USD Forecast: Bulls recover the 0.6700 threshold
AUD/USD Current Price: 0.6726
- Chinese mixed headlines weighed on the Australian Dollar at the beginning of the day.
- Wall Street battled the dismal mood and trimmed most of its intraday losses.
- AUD/USD holds on to daily gains, could extend its rally once above 0.6770.
The AUD/USD pair fell throughout the first half of the day, bottoming at 0.6668. The Australian Dollar was hit but soft Chinese and local data, which also dragged Asian shares into negative territory. The pair recovered during London trading hours and extended its gains well into Wall Street, as the US Dollar fell alongside United States government bond yields.
Noise coming from China and Russia
US indexes struggled for direction. Equities aimed north at the opening, turning red following comments from US President Vladimir Putin, veiled threatening a nuclear war. Still, stocks quickly bounced back, adding pressure on the US Dollar and maintaining AUD/USD on the winning side, now trading in the 0.6720 price zone.
Australia published the November AIG Performance of Services Index, which contracted further, to 45.6 from 47.7 in October. The Q3 Gross Domestic Product (GDP) rose at an annualized pace of 5.9%, better than the previous 3.6% but missing the expected 6.3%. In the three months to September, the economy grew by 0.6%, below the 0.9% of the second quarter and missing the 0.7% forecast.
News coming from China were mixed. On the one hand, the country announced a series of measures relaxing coronavirus restrictions, moving away from the zero-Covid policy. On the other, macroeconomic data was discouraging. The November Trade Balance posted a surplus of #69.84 billion, as exports fell by 8.7%, while imports were down 1.1%. The poor figures revived concerns of a global economic setback.
On Thursday, the Reserve Bank of Australia (RBA) will publish its Q3 Bulletin and the October Trade Balance, expected to post a modest surplus of $A1.15 billion. The United States will offer nothing of interest, as it will only publish the usual weekly unemployment figures.
AUDUSD short-term technical outlook
The daily chart for AUD/USD favors an upward extension without confirming it. The pair met buyers around a flat 100 Simple Moving Average (SMA), recovering above a bullish 20 SMA which maintains its bullish slope above the longer one. At the same time, technical indicators have rotated north, but remain within neutral levels, lacking strength enough to confirm a bullish extension.
In the near term, and according to the 4-hour chart, the upside seems limited. The AUD/USD pair is unable to overcome a bearish 20 SMA but stands above a flat 100 SMA. The 200 SMA, in the meantime, heads firmly higher far below the current level. Technical indicators, in the meantime, have recovered from near oversold readings. However, the Momentum maintains its bullish slope but below its midline, while the Relative Strength Index (RSI) turned flat after reaching its midline.
Support levels: 0.6670 0.6625 0.6580
Resistance levels: 0.6730 0.6770 0.6815
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Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
