AUD/USD Forecast: Another slide, testing levels under 0.6600
AUD/USD Current Price: 0.6598
- US Dollar remains strong versus the Australian Dollar amid market concerns and despite lower US yields.
- Inflation in Australia slows down further; RBA is likely to remain on hold next week.
- AUD/USD tests 0.6600; below comes the YTD low at 0.6563.
The AUD/USD fell for the fourth consecutive day on Wednesday amid a stronger US Dollar and market concerns. As a result, the Australian Dollar lagged again. The outlook is negative, but the direction is US data-dependent.
Inflation in Australia fell in the first quarter from 7.8% to 7.0%, slightly above the 6.9% of market consensus. Measures of core inflation also slowed down to 6.6%. The March CPI printed 6.3% YoY. Next week, the Reserve Bank of Australia (RBA) will likely keep the key rate unchanged at 3.60% after the latest inflation numbers. But, with CPI still above the target, it will likely continue to suggest it could tighten further if necessary.
Market participants expect no change and priced in cuts by September. Those expectations will make economic data more relevant. The RBA will likely downgrade inflations forecasts.
Equity markets dropped again on Wednesday, supporting the demand for the US Dollar amid renewed banking concerns and a gloomy global outlook. An improvement in sentiment could help AUD/USD, while further negativity would make it difficult for the pair to hold above YTD lows. Key US economic data is due on Thursday.
AUD/USD short-term technical outlook
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The picture for AUD/USD bulls has worsened on the daily chart after breaking essential short-term supports. It is about to post the lowest daily close since early March, and the 20-day Simple Moving Average (SMA) is turning south. On the downside, below 0.6600, is the March low at the 0.6565 zone, with interim support at 0.6580. Later emerges the 0.6530 area, another critical level.
On the upside, the immediate resistance is 0.6620, followed by 0.6670. The 4-hour chart shows the 20-period SMA at 0.6650; a recovery above would alleviate the bearish pressure.
Support levels: 0.6580 0.6560 0.6530
Resistance levels: 0.6620 0.6640 0.6670
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Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
