AUD/USD Forecast: Challenge of 0.7000 on the table

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.6975

Concerns about economic growth kept markets in risk-off mode at the beginning of the week.
The Reserve Bank of Australia will release the Minutes of its latest meeting.
AUD/USD advances towards 0.7000, underpinned by firmer equities.

The AUD/USD pair is entering the Asian session trading near Monday’s high of 0.6979, reverting an early slump to 0.6871. The pair fell on the back of risk aversion, as Chinese data released during the Asian session spurred concerns about economic growth. Retail Sales in the country fell by 11.1% YoY in April, while in the same period, Industrial Production contracted by 2.9%, both much worse than anticipated.

The pair traded alongside stocks, recovering modestly during the European session as local indexes trimmed most of their early losses and picking up in the American afternoon as Wall Street managed to post gains. Gold price added to the bullish case of AUD/USD, as the bright metal recovered from a fresh multi-month low of $1,786.69 a troy ounce to close the day with gains around $1,817.00.

The Reserve Bank of Australia will publish the Minutes of its latest meeting on Tuesday, while later in the day, the US will release April Retail Sales.

AUD/USD short-term technical outlook

From a technical point of view, the AUD/USD pair is in a corrective advance. The daily chart shows that technical indicators have bounced from oversold readings, maintaining their bullish slopes within negative levels. At the same time, the 20 SMA heads firmly lower below the longer ones and well above the current level.

In the near term, and according to the 4-hour chart, AUD/USD is bullish. It has managed to extend its gains above a flat 20 SMA while technical indicators keep advancing within positive levels. The 100 SMA provides a relevant dynamic resistance at around 0.7070, also a strong static resistance area.

Support levels: 0.6920 0.6885 0.6840

Resistance levels: 0.6990 0.7030 0.7070

View Live Chart for the AUD/USD

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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.

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