AUD/USD Forecast: Could the RBA save the day?
|AUD/USD Current Price: 0.6689
- Australian and Chinese manufacturing output contracted in January.
- RBA expected to keep rates on hold, Lowe to repeat economy is at a “gentle turning point.”
- AUD/USD barely holding above a critical static support level at 0.6670.
The Australian dollar remained subdued, despite a slightly better market mood during European and American trading hours, amid dismal Asian data. Australia released the AIG Performance of Manufacturing Index, which fell in January to 45.4 from 48.3 in December. The Commonwealth Bank Manufacturing PMI for the same month beat expectations, as it came in at 49.6 from 49.1 previously. Finally, the Caixin Manufacturing PMI showed that output in China contracted to 51.1 from 51.5. Furthermore, base metals were affected by plummeting Chinese equities, all of which affected the commodity-linked currency.
This Tuesday, attention will be on the Reserve Bank of Australia, as the central bank will announce its latest monetary policy decision. Policymakers were expected to cut rates again this month, although odds for another cut decreased after Governor Lowe stated that the economy is at a “gentle turning point.” His words will be scrutinized, although rates are expected to remain on hold.
AUD/USD short-term technical outlook
The AUD/USD pair trades around 0.6690 heading into the Asian opening, holding on to its bearish stance according to the 4-hour chart, as the pair keeps developing below a firmly bearish 20 SMA. Technical indicators remain within negative levels, the Momentum recovering modestly but the RSI still consolidating near oversold readings. The picture remains the same with a steeper decline expected on a break below 0.6670, the immediate support.
Support levels: 0.6670 0.6630 0.6590
Resistance levels: 0.6710 0.6750 0.6795
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