AUD/USD Analysis: extremely oversold, correction won’t change trend

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.6876

Australian Q2 inflation expected to remain below RBA’s target.
US-Sino trade tensions weighing on the Aussie.
AUD/USD set to challenge a long-term support at around 0.6820.

The Australian dollar extended its decline against its American rival to 0.6868 this Tuesday, its lowest since mid-June. Headlines related to mounting tensions between China and the US weighed on the Aussie, as US President Trump said that, while trade talks are going well, he is not sure if he’ll accept China’s offer. Those comments came after he criticized the Asian country for not fulfilling its promise to buy more US agricultural products. Also, Australian data released at the beginning of the day disappointed, as Building Permits fell by 1.2% MoM and by 25.6% YoY, both worst-than-anticipated. This Wednesday, China will release the official Manufacturing PMI for July, seen at 49.6 and the Services Index, expected to print 54.5, both figures above June’s readings. Australia will release Q2 inflation data, seen up by 1.5% YoY.

AUD/USD short-term technical outlook

The AUD/USD pair is heading into the Asian opening consolidating near daily lows, down for an eight consecutive day. The 4 hours chart shows that the 20 SMA continues heading lower above the current level and below the 100 and 200 SMA, which keeps the risk skewed to the downside. Technical indicators are attempting modest bounces, but remain below their intraday highs, while the RSI currently stands at 16. The pair could correct higher due to the extreme conditions, but bears remain in the driver seat, set to challenge a long-term strong support at 0.6820.

Support levels: 0.6850 0.6820 0.6790

Resistance levels: 0.6880 0.6915 0.6940

View Live Chart for the AUD/USD

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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