AUD/USD Forecast: Bearish despite ending the day in the green

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.6932

Australia will release a new business index, the AiG Industry Index, for December.
The US Dollar was volatile around US Federal Reserve chair Powell’s words.
AUD/USD is at risk of losing the 0.6900 threshold and reaching fresh weekly lows.

The AUD/USD pair jumped to 0.6950 during Asian trading hours following a hawkish announcement from the Reserve Bank of Australia (RBA). The central bank delivered, as expected, a 25 basis points (bps) hike, sending the Official Cash Rate (OCR) to 3.35%. RBA Governor Philip Lowe noted that the Board expects further increases in interest rates, as policymakers are resolute in their determination to return inflation to target. “Global inflation remains very high,” the statement reads, although moderating in response to lower energy prices, the resolution of supply-chain problems and the tightening of monetary policy. Following the announcement, market players anticipate at least two more 25-bps rate hikes in March and April.

The US Dollar strengthened heading into the European session, with AUD/USD falling to 0.6885 ahead of US Federal Reserve (Fed) Chair Jerome Powell’s speech. His comments initially encouraged high-yielding demand, pushing the pair to a fresh high of 0.6984, from where the pair resumed its slide.

Early Wednesday, Australia will release a new AiG index, the Industry Index for December, a new monthly indicator of business performance covering a cross-section of industry sectors, as officially stated by AiG.

AUD/USD short-term technical outlook

The daily chart for the AUD/USD pair shows that it holds to modest intraday gains, now trading in the 0.6930 price zone. Nevertheless, additional gains are still unclear, given that the pair remains below a flat 20 SMA, which stands around the 0.7000 price zone. Technical indicators, in the meantime, turned marginally higher but remain below their midlines, lacking enough strength to confirm another leg north.

The 4-hour chart shows that the pair briefly trade above a bearish 20 SMA but settled below it while barely holding above a mildly bullish 200 SMA. At the same time, technical indicators remain within negative levels, the Momentum grinding higher but the RSI heading south, in line with the longer-term perspective.

Support levels: 0.6850 0.6805 0.6770

Resistance levels: 0.6965 0.7000 0.7045

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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