AUD/USD Forecast: Consolidation helps the Aussie
AUD/USD Current Price: 0.6381
- The Australian economy expanded by 0.4% during the second quarter.
- China and Australia trade data and RBA Governor Lowe's speech are on the agenda.
- Risks continue to be tilted to the downside for AUD/USD.
The AUD/USD hit a fresh intraday cycle low but remained above 0.6350 and rebounded. It continues to consolidate between 0.6400 and 0.6360. The bias remains tilted to the downside as the US
The Dollar remains strong across the board. Positive data from Australia offered a limited boost to the Aussie, while cautious market sentiment continues to support the Greenback.
Data released on Wednesday showed that the Australian economy grew 0.4% during the second quarter, surpassing market consensus of 0.3%. The annual growth rate slowed from the revised 2.4% in the first quarter (previously 2.3%) to 2.1%, which was higher than the expected 1.7%.
However, the growth figure had no significant impact on the Australian Dollar. The release is unlikely to change the perspective of the Reserve Bank of Australia (RBA) as growth is expected to continue slowing down, and negative risks, mainly from China, are increasing. The RBA left its key interest rate unchanged on Tuesday.
On Thursday, Australia's July trade data is due, but more importantly, Chinese August trade data and RBA Governor Lowe's speech will be closely watched. Given the current concerns about the state of the Chinese economy, trade figures will be of great importance. Stronger-than-expected numbers could boost the Aussie. Lowe's speech may receive less attention considering that he will no longer be the central bank governor in two weeks.
The US Dollar remains supported by positive economic data. On Wednesday, the ISM Services PMI surprised expectations, coming in at 54.5, above the market consensus of 52.5, with increases in the Price and Employment indices. Initially, this boosted the US Dollar, but the momentum later faded. On Thursday, the weekly Jobless Claims report and revised Unit Labor Cost data are due.
AUD/USD short-term technical outlook
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The AUD/USD remains under pressure, but as long as it holds above 0.6350, losses seem limited. The currency is consolidating between 0.6405 and 0.6360, offering some hope to the bulls for a potential stabilization. A decisive break above 0.6500 would indicate a more sustained rebound.
The pair was rejected from above 0.6400 and pulled back towards 0.6370, in the middle of the current consolidation range. Price remains below key simple moving averages, with the Relative Strength Index near 30. However, Momentum shows positive signs as it starts to turn to the upside. In the short term, if the pair rises above 0.6400 and holds, it would alleviate the bearish pressure. The next strong resistance level lies around 0.6445. On the flip side, a move below 0.6350 would target the 0.6330 area, with further downside potential towards 0.6300.
Support levels: 0.6350 0.6330 0.6300
Resistance levels: 0.6405 0.6440 0.6460
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Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
