AUD/USD Forecast: Bearish pressure intensifies below 0.6400, Australian inflation next
AUD/USD Current Price: 0.6396
- The US Dollar remains firm, supported by risk aversion.
- Australia's Monthly CPI is due on Wednesday, while the US Core PCE is scheduled for Friday.
- The bias in AUD/USD points to further losses, targeting September lows and 0.6305.
The AUD/USD pair dropped again on Tuesday and was on its way to reaching the lowest daily close since September 8, approaching the monthly lows at 0.6355. The combination of risk aversion, concerns about China, and a stronger US Dollar keeps the pair under pressure.
The Australian Dollar faces negative pressure due to ongoing concerns about the Chinese property sector, particularly after Evergrande Group missed payments on onshore bonds. Adding to the negative sentiment, equity prices on Wall Street accelerated their decline on Tuesday.
The deteriorating market sentiment weighs on the Aussie. Australia will release inflation data on Wednesday. The Monthly Consumer Price Index (CPI) is expected to rebound in the annual rate from 4.9% to 5.2% due to higher petrol prices. However, a number in line with market expectations may have a limited impact on the Australian Dollar. A negative surprise would indicate a less hawkish stance from the Reserve Bank of Australia (RBA), putting downward pressure on the Aussie in the short term but potentially being welcomed news for policymakers.
The US Dollar remains firm, supported on Tuesday by risk aversion. US data came in below expectations, with annual New Home Sales declining to 675,000 instead of the expected 700,000, and the CB Consumer Confidence Index dropping from 108.7 to 103.0, below the market consensus of 105.5. On Wednesday, Durable Goods Orders data is due.
AUD/USD short-term technical outlook
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The AUD/USD failed to hold above 0.6400 and is approaching the September lows around 0.6355. The outlook for the Aussie is slowly deteriorating as the price has moved away from the 20-day Simple Moving Average (SMA), which is starting to turn south.
On the 4-hour chart, the bias is to the downside, and fresh lows will likely be reached while it trades below 0.6425. The Relative Strength Index (RSI) is approaching 30, indicating bearish momentum. The next support level can be found at 0.6365, with the last defence before the September lows at 0.6355. A break lower could trigger an acceleration, initially targeting 0.6345, and then, the next strong support zone at 0.6305.
Support levels: 0.6365 0.6345 0.6305
Resistance levels: 0.6420 0.6445 0.6475
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.
