AUD/USD Forecast: Risks tilted to the downside, testing 0.6400

Matías Salord FXStreet

AUD/USD Current Price: 0.6412

Negative risk sentiment weighs on the Australian Dollar, which remains affected by the dovish RBA stance.
US Dollar posts mixed results as yields decline.
The AUD/USD pair fails to recover ground, remaining near the 0.6400 support area.

The AUD/USD rose during the Asian session, staging a modest recovery. However, after facing resistance near the 0.6450 area, it turned to the downside, falling towards 0.6400 due to risk aversion and a strong US Dollar.

On Thursday, China will release the Consumer Price Index (CPI) and the Producer Price Index (PPI). These figures could impact market sentiment, particularly for the Aussie. No data from Australia is due. On Friday, the Reserve Bank of Australia (RBA) will release its Monetary Policy Statement following Tuesday's 25 basis points interest rate hike.

The boost from the RBA rate hike lasted just a few minutes. The Aussie remains under pressure due to the dovish stance of the statement, that sets a high bar for another hike.

Regarding economic data, in the US on Thursday, the weekly Jobless Claims report is due. It will be relevant considering the lack of economic figures this week, and especially considering that last week, both Initial and Continuing Claims rose more than expected to the highest level in weeks. Also important will be the participation of Federal Reserve Chair Jerome Powell in a panel discussion on monetary challenges later in the day.

The greenback received support on Wednesday due to risk aversion as stocks on Wall Street retreated from their weekly highs and were on track to end a positive seven-day streak.

AUD/USD short-term technical outlook

On the daily chart, the AUD/USD continues to move between the 20-day Simple Moving Average (SMA) and the 55-day SMA (0.6505). The 0.6400 level has become a relevant support, and a consolidation below it should bring further weakness to the Aussie, exposing the 20-day SMA at 0.6360. A daily close above 0.6520 would open the doors to more gains over the medium term.

On the 4-hour chart, the price is well below the 20-period SMA, and technical indicators show a tilted risk to the downside. Between 0.6380 and 0.6400, the pair has horizontal and dynamic support areas, including a short-term upward trendline that could limit the downside. However, a break below 0.6380 would signal further losses ahead. A consolidation above 0.6450 would remove the current negative tone.

Support levels: 0.6400 0.6380 0.6350

Resistance levels: 0.6450 0.6475 0.6505

View Live Chart for the AUD/USD

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Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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