AUD/USD Forecast: Bulls might lose the battle
AUD/USD Current Price: 0.7095
- Australian business activity slowed in May, according to preliminary estimates.
- The Reserve Bank of New Zealand could hike rates by 50 bps on Wednesday.
- AUD/USD seems to be losing its positive momentum after falling below 0.7100.
The AUD/USD pair recovered from an intraday low of 0.7056 to settle below 0.7100, marginally lower on a daily basis. The pair advanced solely on the greenback’s broad weakness as the market’s mood remained sour. Macroeconomic figures pointed to slowing economic progress in the second quarter of the year, as inflation did not recede while coronavirus-related lockdown in China exacerbated supply chain issues. In fact, JP Morgan downgraded China’s growth forecast to 3.7% from 4.3% in 2022, while other research institutes followed suit.
Meanwhile, S&P Global published the preliminary estimates of May Australian PMIs. The manufacturing index contracted to 55.3, worse than anticipated, while the services one came down to 53 from 56.6 previously, although slightly better than anticipated. The country will release Q1 Construction Word Done, although the focus in Asia will be on the Reserve Bank of New Zealand, which is expected to hike the benchmark rate by 50 bps to 2%.
AUD/USD short-term technical outlook
The AUD/USD pair was unable to hold above 0.7100, the 61.8% retracement of its 0.7265/0.66828 slump, meeting sellers around it. The daily chart shows that the pair remains above a directionless 20 SMA, which holds a handful of pips below the immediate Fibonacci support at 0.7045. The Momentum indicator retreated sharply from its midline, while the RSI is stable within neutral levels, suggesting decreased buying interest.
The 4-hour chart shows that the pair remains above a bullish 20 SMA, which advances above a flat 100 SMA. The 200 SMA, however, maintains its bearish slope well above the current level. Finally, technical indicators hold directionless above their midlines. Further declines could be confirmed on a break below the 50% retracement of the aforementioned slide at 0.7045.
Support levels: 0.7045 0.7000 0.6960
Resistance levels: 0.7130 0.7175 0.7210
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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.
