• RBA concerned about wages’ growth and lower rates backfiring.
  • US-China progress in trade talks underpinned the Aussie.
  • AUD/USD at a brink of turning south, 0.6840 critical support.

The AUD/USD is ending the week with losses, after another failed attempt to extend gains beyond the 0.6930 resistance area. The pair battled throughout the week to extend gains beyond the 0.6900 level but gave up Friday, undermined by the Reserve Bank of Australia quarterly Monetary Policy Statement.

The document showed that policymakers are concerned that additional rate cuts might backfire by denting consumer sentiment.  The Minutes of the latest monetary policy meeting indicated that low rates are also a concern in regards to the housing sector, as property prices might be overly inflated. That said, a rate cut is out of the table but also are hikes, amid stagnated progress in wages’ growth.

Australian economy still in trouble

Australian data was generally discouraging, although hopes that the US and China may reach a trade agreement kept the downside limited for the pair, providing a reason to buy the Aussie. The latest news indicate that both economies are confident they could roll back tariffs in phases once a deal is reached. There are some tensions surrounding talks, as both economies seem to be escalating demands to take the most out of the deal.

This Friday, a White House Spokesman said that the US is “very, very optimistic” about reaching a trade deal with China. Ahead of London’s close, however, there were news making the rounds that US President Trump has yet to decide on levies.

Next Thursday, Australia will release November Consumer Inflation Expectations, foreseen at 3.2% from 3.6% previously, and October employment data. The economy is expected to have added 15K new jobs, while the unemployment rate is seen ticking higher to 5.3%. Also, on Thursday, China will release October Industrial Production and Retails Sales.

AUD/USD Technical Outlook

The AUD/USD pair has trimmed half of the previous weekly gains, technically neutral in the weekly chart, with an increased risk of turning south. The price is barely resting above a flat 20 SMA, while technical indicators hover around their midlines, lacking clear directional strength. The pair has falsely broken the neckline of a double bottom figure, now hovering around it. There are still chances that the figure could develop, although such chances would decrease on a break below 0.6840, the immediate support.

In the daily chart, the pair is holding above its 20 and 100 DMA, with the shorter one about to cross above the larger one, although the price is quite close to it, while technical indicators maintain strong bearish slopes, suggesting that the pair could extend its decline.

Below the mentioned 0.6840, the next support comes at 0.6770, with a break below this last exposing the yearly low at 0.6670. Beyond the 0.6930 price zone, the pair has room to recover up to 0.7000.

AUD/USD sentiment poll

The AUD/USD pair is seen recovering in the short-term, but giving up afterwards, according to the FXStreet Forecast Poll. In the short-term, 53% of the polled experts are hoping for an advance, although the average target is barely above the current level. Bears take the lead int the monthly and quarterly updates, with most targets then accumulating below the current price according to the Overview chart, and despite the moving averages retain their bullish slopes.

 Related Forecasts:

EUR/USD Forecast:  US-China headlines to keep stealing the show

USD/JPY Forecast: Buy Trump's trade rumor, sell the fact? Powell's outlook also eyed

GBP/USD Forecast: Four Top-tier figures to determine direction after BOE blow, election mess

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

GBP/USD soars past 1.2900 as Farage gives additional boost to Conservatives

GBP/USD has leaped above 1.29, the highest since early November, as the Brexit Party has failed to field candidates in 43 additional seats, facilitating a victory for PM Boris Johnson.

GBP/USD News

EUR/USD advances 1.10 amid upbeat trade headlines, after mixed US retail sales

EUR/USD is trading closer to 1.1050, up on the day. US Commerce Secretary Ross has expressed optimism about reaching a deal with China. The Retail Sales Control Group met expectations with 0.3%.

EUR/USD News

USD/JPY clings to gains near session tops, around 108.70 post-US data

The USD/JPY pair maintained its strong bid tone near session tops and had a rather muted reaction to the mixed US economic data.

USD/JPY News

US Dollar Index challenges weekly lows near 98.00

The US Dollar Index (DXY), which gauges the buck vs. a bundle of its main rivals, is now accelerating the downside and threatens to test the key support at 98.00 the figure.

US Dollar Index News

Trump Impeachment: Markets will not like any replacement

The public phase of the impeachment hearings against President Donald Trump has kicked off, with the US public and parties divided more than ever. How does it affect markets?

Read more

Forex Majors

Cryptocurrencies

Signatures