AUD/USD Forecast: Consolidation expected with bearish risk while below 0.6640

AUD/USD Current Price: 0.6607

• The US Dollar recovered further on Thursday, despite mixed US data, supported by higher yields.
• The AUD/USD retreat but found support at the 200-day SMA.
• The Aussie needs to reclaim 0.6640 to strengthen again.

The AUD/USD rose during the Asian session to 0.6650 but then turned downside, hitting a three-day low at 0.6570 before recovering to the 0.6600 area. The US Dollar recovered ground for the second day in a row, despite higher equity prices on Wall Street.

Data released on Thursday showed that Private Sector Credit rose 0.3% in October, below the expected 0.4%, and Price Capital Expenditure expanded by 0.6% during the third quarter, below the market consensus of 1%. The somewhat soft data of the latest reports from Australia weighed on the Reserve Bank of Australia's tightening expectations, partially offset by Governor Bullock's comments. On Friday, the final reading of the Manufacturing PMI is due.

The Chinese NBS Manufacturing PMI unexpectedly dropped in November from 49.5 to 49.4, and the Non-Manufacturing PMI fell from 50.6 to 50.2. These numbers indicate that there is no significant recovery in China, which is a negative factor for the Aussie. On Friday, the Caixin Manufacturing PMI is due.

The US Dollar strengthened on Thursday as data pointed to a slowdown in inflation, and the weekly Jobless Claims report offered mixed signals, with Initial Claims rising less than expected but Continuing Claims reaching the highest level since November 2021. US yields edged higher. On Friday, the ISM Manufacturing PMI is due, expected to rise to 47.8 (last week, the S&P Global PMI came below expectations at 49.4). 

AUD/USD short-term technical outlook

The AUD/USD pulled back, finding support at the 200-day Simple Moving Average (SMA). Technical indicators on the daily chart favor the upside, however, the Relative Strength Index (RSI) is falling from 70, suggesting further consolidation ahead. A daily close above 0.6650 would open the doors to more gains, while a break below 0.6575 should indicate an extension of the correction.

On the 4-hour chart, the Aussie has recently broken under a trend line and fallen below the 20-period SMA. The 0.6590 area appears to be a supportive level to consider, followed by 0.6570, and below that, the target stands at 0.6530. If the pair rises above 0.6640, the Aussie is likely to strengthen, preparing to test 0.6660, which is the last defense before fresh highs.

Support levels: 0.6590 0.6570 0.6530

Resistance levels: 0.6635 0.6660 0.6685 

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