AUD/USD Forecast: Bearish on a break below 0.6865

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.6889

A trade deal between the US and China likely to limit the downside for the pair.
Australia will release the preliminary estimates of the December PMI.
AUD/USD retreated sub-0.6900 but holds above the critical 0.6865 support.

The AUD/USD pair surged on Friday to its highest in over 4-month, printing 0.6938 before retreating. The early momentum was the result of UK PM Johnson´s victory and hopes for a US-China trade deal. The agreement was announced by the end of the US session, boosting the greenback and dragging the pair sub-0.6900. Nevertheless, it closed with gains for a second consecutive week, and risk-appetite should keep the downside limited even in the case of dollar’s persistent strength.

This Monday, Australia will release the preliminary December Commonwealth Bank Manufacturing PMI, foreseen at 50.4 from the previous 49.9, and the Services PMI, expected at 49.1 from 49.7 previously. China will publish November Industrial Production expected to have risen by 5.0% and Retail Sales for the same month, seen up by 7.6%.

AUD/USD short-term technical outlook

The daily chart for the AUD/USD pair shows that it failed to hold ground above a bearish 200 SMA, this last around 0.6905. The 20 DMA is barely above the 100 DMA, both around 0.6800, lacking clear directional strength. Technical indicators have retreated from overbought readings, suggesting the pair may have hit an interim top, to be confirmed if the current decline continues sub-0.6865 a former relevant resistance level. In the 4-hour chart, the pair stalled its decline around a bullish 20 SMA, which remains above the larger ones, while technical indicators retreated sharply from overbought readings to stabilize in neutral levels, falling short of confirming a downward movement ahead.

Support levels: 0.6865 0.6830 0.6800

Resistance levels: 0.6900 0.6935 0.6970

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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