AUD/USD Forecast: Aussie can extend its recovery if the sentiment improves

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.6415

The US Dollar lost its charm despite a still tepid market mood.
Chinese economic woes remain in the eye of the storm, hitting global stocks.
AUD/USD looks exhausted to the downside, possible corrective advance in the makes.

AUD/USD trades a handful of pips above the 0.6400 threshold, edging marginally higher on Monday as the US Dollar lost momentum despite a persistent dismal mood. The pair gapped higher at the weekly opening but quickly eased to 0.6364, as the poor performance of Asian equities limited AUD demand. The pair recovered in the American afternoon, as despite trading with a soft tone, US indexes trimmed losses and trade mixed, with only the Dow Jones Industrial Average holding in the red.

Financial markets kept an eye on China at the beginning of the week as the world's second-largest economy struggles to recover momentum following the extended coronavirus restrictions. News that a real estate company and a shadow trust bank could notto fulfil payments lifted concerns of a financial crisis last week, and speculative interest remains sensitive to headlines from the country. At the same time, market participants are concerned about central banks extending their tightening cycles, which turn into higher risks of recessions.

Data-wise, the Australian macroeconomic calendar has nothing to offer until next Wednesday, when the country will see the release of the preliminary estimates of the August S&P Global PMIs.

AUD/USD short-term technical outlook

From a technical point of view, the AUD/USD pair daily chart suggests the pair could extend its recovery, although further gains will also depend on a better sentiment. Technical indicators are bouncing from oversold readings, although their advances are pretty limited, as well as the upward momentum. At the same time, the pair develops far below all its moving averages, with the 20 SMA heading firmly south.

Support levels: 0.6360 0.6320 0.6275

Resistance levels: 0.6450 0.6495 0.6530

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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