AUD/USD Forecast: at risk of losing 0.7000
|AUD/USD Current price: 0.7057
- Despite broad dollar's weakness, equities' collapse favors the greenback against the Aussie.
- Thin market conditions to prevail until the first week of January.
The AUD/USD pair trades measly 40 pips above its yearly low of 0.7020, as despite broad dollar's weakness, the Aussie is being dragged by commodities and equities, which trade also at early lows, with US oil barely holding above $45.00 a barrel and US indexes at levels last seen in October 2017. The Australian currency has been hit in the second half of the year by increased concerns about an economic downturn in China and the rest of the world.
The pair flirted with the mentioned yearly low Friday, as worse-than-expected US data sent Wall Street's nose-diving. A modest bounce has occurred with the weekly opening, albeit the advance is being capped by the sour tone of equities. Several markets are closed and the US ones are due to an early close for the Christmas holiday, with little to be expected today. Meanwhile, US Treasury Secretary Mnuchin called top executives from the six largest US banks to discuss liquidity, which triggered a modest bounce in US equities ahead of the opening. Still, with the US government shutdown and latest data, chances are skewed to the downside both, for Wall Street and AUD/USD.
The bearish stance prevails for the AUD/USD pair according to the 4 hours chart, as the pair is developing well below moving averages, with the 20 and 100 SMA converging with downward slopes around 0.7215. Technical indicators in the mentioned time frame have barely bounced from oversold readings, without enough strength to confirm an upcoming bullish move. The immediate resistance comes at 0.7080, with chances of a recovery up to 0.7130 on a break above it. Below the mentioned yearly low, a break below 0.7000 seems likely.
Support levels: 0.7140 0.7110 0.7080
Resistance levels: 0.7175 0.7220 0.7250
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