AUD/USD Forecast: Aussie rejected from above 0.6800, again
AUD/USD Current Price: 0.6764
- Australian Dollar still unable to make a decisive break higher amid mixed market sentiment.
- US Dollar weakens after US CPI and then rebounds.
- The AUD/USD spikes to 0.6818 and then pulls back 0.6740.
The AUD/USD spiked to the 0.6820 area reaching the highest intraday level since mid February but then pulled back towards 0.6760, erasing the day’s gains. The move higher was driven by a weaker US Dollar following US inflation data but then, the Greenback recovered strength pushing the pair back under 0.6800.
Data for the US showed inflation inched down again in April with the annual Consumer Price Index (CPI) falling from 5% to 4.9%; and the Core rate from 5.6% to 5.5%. Those numbers came in mostly in line with expectations. The US Dollar weakened across the board after the reports, boosting AUD/USD.
A sharp slide in US yields weighed on the Greenback. But, a mixed market sentiment kept AUD/USD limited. On Thursday, the US will release more inflation data with the Producer Price Index (PPI) and the weekly Jobless Claims report.
The AUD/USD continues to be limited on the upside while at the same time, corrections have been modest, suggesting that the underlying momentum still points to the upside. More signs of easing inflation in the US on Thursday could offer a new boost to the upside. The Melbourne Institute will release Inflation Expectations and Westpac Consumer Confidence reports.
AUD/USD short-term technical outlook
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The AUD/USD pair continues to be unable to consolidate above the 100-day Simple Moving Average (SMA). It was rejected again from above 0.6800. Still, it continues to trade above other key SMAs including the 20 and 200-day. The bias is to the upside, and if it holds above 0.6800 it would open the doors to more gains and probably to 0.6900.
On the 4-hour chart, technical indicators are offering mixed-to-bearish signs with the Relative Strength Index (RSI) showing a bearish divergence with the May 8 and 10 price peaks and Momentum moving south. Price remains above an uptrend line and is hovering around the 20-period SMA. Above 0.6775, the pair could go for another test of 0.6800, while under 0.6740 it would lose momentum. A decline under 0.6700 would point to a deeper correction.
Support levels: 0.6745 0.6700 0.6650
Resistance levels: 0.6805 0.6830 0.6855
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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.
