AUD/USD analysis: depending on market's sentiment

Valeria Bednarik FXStreet

AUD/USD Current price: 0.7118

Scarce macroeconomic calendar in Australia and China to keep the pair lead by sentiment.
Up for a second consecutive week, the AUD/USD pair bearish tone eased but remains below key 0.7250.

The AUD/USD pair recovered from a weekly low of 0.7088, settling around 0.7120, enough to close the week in the green. The pair, however, lost the positive momentum seen at the beginning of the week, and Friday's recovery had more to do with the dollar easing and equities recovering from daily lows, than with Aussie's self-strength. Chinese data weighed on the pair at the beginning of the day, as the country's GDP came in below expected for the third quarter, down to 6.5% while Industrial Production grew by 5.8%, also missing expectations. Retail Sales, however, were up 9.2% YoY in September. This upcoming week, the macroeconomic calendar for both economies, Australia and China, will be quite scarce, which will leave the Aussie in the hands of sentiment.

From a technical point of view, the pair is trading around the 38.2% retracement of its October decline after flirting with the 61.8% retracement of the same slide at the beginning of the week at 0.7160, a key resistance level for the upcoming sessions. In the daily chart, the pair settled below its 20 DMA, also below the larger ones, all of them with strong bearish slopes. Technical indicators have advanced modestly, heading north within neutral levels. Shorter term, and according to the 4 hours chart, the pair offers a neutral-to-bearish stance, as technical indicators hold directionless around their midlines, while the price is a few pips below the 20 and 100 SMA, with the shortest lacking directional strength.

Support levels: 0.7085 0.7040 0.7000

Resistance levels: 0.7130 0.7160 0.7200

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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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