AUD/USD Forecast: Australian growth under scrutiny

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.7059

Upbeat Chinese data failed to impress, but poor Australian figures hit the Aussie.
Wall Street trimmed pre-opening losses and turned positive amid signs of easing US inflation.
AUD/USD bullish potential limited as the pair keeps posting lower lows.

The AUD/USD pair trades around 0.7050, recovering from an intraday low of 0.6983. The pair fell throughout the first half of the day on the back of persistent US Dollar demand and worse-than-anticipated Australian data. The country reported December Retail Sales, which unexpectedly fell 3.9% MoM. Furthermore, Private Sector Credit grew by less than anticipated in the same month, advancing a modest 0.3%.

Risk aversion maintained equities under pressure despite upbeat Chinese data. The official NBS Manufacturing PMI improved in January to 50.1 from 47 in December, while the Non-Manufacturing PMI jumped to 54.4 from 41.6. The sharp recovery could be attributed to the government’s decision to drop the zero-covid policy. Nevertheless, Asian stocks finished the day in the red, backing demand for the safe-haven Greenback.

Financial markets changed direction ahead of Wall Street’s opening, with US indexes recovering and the American currency giving up. The flip in sentiment was triggered by news indicating easing wage pressures in the US ahead of the Federal Reserve’s decision.

During the upcoming Asian session, Australia will publish the January AIG Performance of Manufacturing Index, previously at 44.7, and the S&P Global Manufacturing PMI, expected to be confirmed at 49.8. Later in the day, the focus will be on the US Federal Reserve monetary policy decision and whatever Fed’s policymakers hint for the near future.

AUD/USD short-term technical outlook

The daily chart for the AUD/USD pair shows that the chances of a steeper decline are limited. The pair held above a bullish 20 SMA, which currently stands at around 0.6965, while the longer moving averages remain directionless far below it. Technical indicators, in the meantime, turned flat within positive levels after correcting the overbought conditions reached last week.

The 4-hour chart shows that the pair recovered after testing a mildly bullish 100 SMA, although a bearish 20 SMA provides near-term dynamic resistance at 0.7080. Technical indicators, on the other hand, moved away from oversold readings but lost their upward strength and stabilized below their midlines, indicating restricted buying interest.

Support levels: 0.7030 0.6995 0.6960

Resistance levels: 0.7080 0.7125 0.7160

View Live Chart for the AUD/USD

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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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