AUD/USD Forecast: Resting above a critical Fibonacci support level
|AUD/USD Current Price: 0.6877
- The PBOC trimmed lending rates in an attempt to boost economic activity.
- Australian S&P Global PMIs are expected to show improved business activity in August.
- AUD/USD gains bearish strength, needs to break below 0.6855.
The AUD/USD pair advanced throughout the first half of the day to trade as high as 0.6928 but trimmed early gains to end the day unchanged in the 0.6870 price zone. The aussie benefited from the People’s Bank of China’s decision to trim its lending rates. The central bank cut the one-year Prime Lending Rate by 5 bps and the five-year rate by 15 bps in an attempt to boost economic activity.
Financial markets became risk-averse during London trading hours, pushing stock markets lower, which weighed on the aussie while boosting the dollar’s demand. Australia did not publish macroeconomic data on Monday but will release the preliminary estimates of the S&P Global August PMIs. Economic activity is seen improving from July levels, preventing AUD/USD from falling sharply.
AUD/USD short-term technical outlook
Technically, the AUD/USD pair is holding above a critical support level, 0.6855, the 61.8% retracement of its latest daily advance. The risk is skewed to the downside, according to the daily chart, as the pair remains well below bearish moving averages. Technical indicators, in the meantime, remain within negative levels although lacking directional strength.
The 4-hour chart shows that the 20 SMA heads firmly lower below its 100 and 200 SMAs, hinting at another leg south. Furthermore, technical indicators turned lower below their midlines, another sign of bears’ strength.
Support levels:0.6855 0.6810 0.6770
Resistance levels: 0.6910 0.6955 0.6990
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