AUD/USD Forecast: Holding on to the higher end of the weekly range
AUD/USD Current Price: 0.7290
- The Reserve Bank of Australia maintained its monetary policy unchanged as expected.
- The better performance of equities, reflecting an improved mood, underpinned aussie.
- AUD/USD trades at the upper end of its weekly range, but the bullish potential is limited.
The AUD/USD pair reversed an early slide and finished the day pretty much unchanged, around the 0.7290 level. The Australian currency dipped at the beginning of the day, weighed by the poor performance of Asian equities. It later recovered alongside higher European and American indexes, which reflected a better market’s mood.
Earlier in the day, the Reserve Bank of Australia had a monetary policy meeting, and as widely anticipated, it maintained the main cash rate at 0.10% and the target of 10 basis points for the April 2024 Australian government bond. Additionally, they repeated that they will continue to purchase government securities at the rate of $4 billion a week until at least mid-February 2022.
Macroeconomic data coming from the country was most encouraging, as the AIG Performance of Construction Index improved from 38.4 to 53.3 in September, while the Commonwealth Bank Services PMI beat expectations by printing at 45.5. Finally, the August Trade Balance posted a larger than anticipated surplus of 15.077 billion.
Worth mention that Prime Minister Scott Morrison announced that foreign tourists won’t be welcomed in Australia until at least next year, although vaccinated citizens and permanent residents would be allowed to fly overseas starting in November. On Wednesday, Australia will publish September TD Securities Inflation, while the Reserve Bank of New Zealand will unveil its monetary policy decision, which may have some effects on AUD/USD direction.
AUD/USD short-term technical outlook
From a technical point of view, the upside seems limited for the AUD/USD pair, as it keeps hovering around the 38.2% retracement of its latest daily decline, unable to clear the level. The daily chart shows that a firmly bearish 20 SMA converges with the current level, while technical indicators keep lacking directional strength within neutral levels.
AUD/USD holds to the upper end of its weekly range, but the 4-hour chart shows it keeps hovering around a flat 200 SMA, while the 20 SMA advances below the current level. However, the Momentum indicator turned south within positive levels while the RSI consolidates around 60, indicating decreasing buying interest as the pair approaches 0.7300.
Support levels: 0.7175 0.7130 0.7090
Resistance levels: 0.7250 0.7290 0.7330
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.
