AUD/USD Forecast: Can bulls defend the 0.7000 threshold?

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.7095

The Australian dollar fell alongside Wall Street as investors rushed to safety.
The Bank of England put recession on the table and triggered panic among investors.
AUD/USD has trimmed most of its weekly gains after reaching a critical Fibonacci level.

The AUD/USD pair ended the day in the 0.7090 price zone after hitting 0.7265 at the beginning of the day. The pair followed the lead of US indexes, soaring alongside Wall Street following the US Federal Reserve monetary policy decision, then plummeting on Thursday as equities collapsed. The slump in high-yielding assets came after the Bank of England warned that the UK could fall into recession this year and raised the main benchmark rate by 25 bps, reviving speculative interest fears. Government bond yields soared, dragging the American dollar alongside.

Australian data came in mixed. March Building Permits were down 18.5% MoM, much worse than anticipated, but the Trade Balance for the same month posted a surplus of 9,314 million, beating expectations. Australia will publish the April AIG Performance of Services Index, previously at 56.2. Also, the Reserve Bank of Australia will publish the Monetary Policy Statement.

AUD/USD short-term technical outlook

The AUD/USD pair topped for a second consecutive day just ahead of the 38.2% retracement of its latest daily slump measured between 0.7660 and 0.7029 at 0.7270. The daily chart shows that the 20 SMA heads firmly lower and is currently crossing below the longer ones, which remain directionless. Technical indicators have resumed their declines within negative levels after correcting oversold conditions, in line with another leg south.

The pair turned bearish in the 4-hour chart. After meeting sellers around a bearish 100 SMA, AUD/USD also settled below the 20 SMA. At the same time, technical indicators have retreated from overbought readings and currently consolidate within negative levels. A break through the base of the Fibonacci decline exposes the year low at 0.6966, with lower lows in sight for the upcoming sessions.

Support levels: 0.7030 0.7000 0.6965

Resistance levels: 0.7120 0.7165 0.7210

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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