AUD/USD Forecast: Buyers retake control after a short-lived setback
AUD/USD Current Price: 0.6984
- Australian Westpac Consumer Confidence improved for a second consecutive month in January.
- The poor tone of global equities prevented AUD/USD from running further.
- AUD/USD maintains the bullish stance and could extend its rally to 0.7100.
The AUD/USD pair started the day with a weak tone, falling to a fresh weekly low of 0.6929, but bounced back during the American session to end the day with gains at around 0.6980. The Australian Dollar fell despite dismal macroeconomic figures unveiled at the beginning of the day, weighed by the soft tone of Asian equities. Wall Street is also on the back foot, with the Dow Jones Industrial Average poised to end the day with sharp losses. Nevertheless, AUD buyers refuse to give up.
Australia published January Westpac Consumer Confidence, which improved for a second consecutive month, up to 5% from 3% in December. Additionally, China published the first estimate of the Q4 Gross Domestic Product (GDP), which remained pat compared to the previous quarter, better than the 0.8% decline expected. On a yearly basis, the economy grew 2.9%, down from 3.9% previously but also beating expectations of 1.8%. Furthermore, Chinese Retail Sales were down by 1.8% in December vs the 7.8% collapse anticipated.
On Wednesday, Australia will publish Building Permits, with the focus on the Bank of Japan (BoJ) monetary policy decision.
AUD/USD short-term technical outlook
The AUD/USD pair has room to retest its recent high at 0.7018 and even run beyond it, according to technical readings in the daily chart. The pair remains well above all of its moving averages, with the 20 Simple Moving Average (SMA) accelerating its advance and about to cross above a still bearish 200 SMA. At the same time, technical indicators hold directionless well above their midlines, reflecting the absence of selling interest.
In the near term, and according to the 4-hour chart, the risk skews to the upside. The pair is currently developing above a mildly bullish 20 SMA after easing below it at the beginning of the day. Meanwhile, the Momentum indicator resumed its advance, heading north above its 100 line, as the Relative Strength Index (RSI) indicator consolidates around 58. The pair could approach 0.7100 once above 0.7020, the immediate resistance level.
Support levels: 0.6920 0.6880 0.6835
Resistance levels: 0.7020 0.7065 0.7110
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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.
