AUD/USD Forecast: Plummeting equities undermine demand for the aussie

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.7115

Geopolitical tensions dominate headlines to the detriment of high-yielding currencies.
Gold soared to a fresh 2022 high of $1,874.11 amid ruling risk aversion.
AUD/USD is at risk of falling harder if it finally breaks below the 0.7100 threshold.

The AUD/USD pair recovered from an intraday low of 0.7085 to end the day around the 0.7110 level. The pair initially fell amid ruling risk-aversion, triggered by continued tensions between Russia and Ukraine. The recovery came as US equities bounced off their intraday lows, although major indexes remain in the red after resuming their declines heading into the close. Partially offsetting losses was gold, as the bright metal reached a fresh 2022 high of $1,874.11 a troy ounce.

Data wise, neither Australia nor the US released relevant macroeconomic figures. During the upcoming Asian session, however, the Reserve Bank of Australia will release the Minutes of its latest meeting. Market players will be looking for hints about the likely timing of a rate hike in the country. Later in the day, the US will publish the January Producer Price Index, expected to have eased from a record 9.7% YoY in the previous month.

AUD/USD short-term technical outlook

The AUD/USD pair remains below a Fibonacci resistance at around 0.7140, and the daily chart offers a neutral-to-bearish stance. It shows that the pair is struggling around a mildly bearish 20 SMA while below the longer ones, as technical indicators remain directionless around their midlines.

The 4-hour chart shows that the pair is developing between moving averages, all of them with modest downward slopes. At the same time, technical indicators hold within negative levels, lacking clear directional strength. Renewed selling pressure below the 0.7100 level should lead to a steeper decline in the upcoming sessions.

Support levels: 0.7100 0.7050 0.7010

Resistance levels: 0.7140 0.7180 0.7215

View Live Chart for the AUD/USD

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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.

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