AUD/USD Forecast: More weakness below 0.6630

Matías Salord FXStreet

AUD/USD Current Price: 0.6648

Aussie fails to benefit from the upbeat tone in Wall Street.
AUD/USD starts the week consolidating around 0.6640.
Australia to report retail sales on Tuesday, and inflation on Wednesday.

The AUD/USD traded sideways on Monday, validating the retreat from 0.6700, in a quiet session. Concerns about the banking sector eased, stocks rose, but the Aussie failed to advance. Key economic data from Australia will weigh on expectations about the next Reserve Bank of Australia (RBA) meeting.

In Wall Street, equity prices were mixed, with bank stocks recovering sharply. Government bond yields rose on Monday. The US 10-year bond yield climbed above 3.50%, and the 2-year above 4.00%. While the AUD/USD failed to benefit from rising equity prices, the US Dollar did not respond to higher US yields.

In Australia, relevant economic reports are coming. On Tuesday, Retail Sales are expected to show a 0.4% increase in February, following a 1.9% gain in January. Positive numbers would keep the door open for another rate hike from the RBA next week. On Wednesday, the monthly Consumer Price Index will be crucial and of more importance for the market if sales do not surprise.

AUD/USD short-term technical outlook

The AUD/USD started to move lower last week after reaching the 200-day Simple Moving Average (SMA) at the 0.6760 zone. On Monday, the pair moved sideways in a small range between 0.6660 and 0.6630, below the 20-day SMA (0.6670). The trend on the daily chart is still bearish, reinforced by the fact the price is below key moving averages; however, technical indicators offer mixed signs. A firm break of 0.6770 would change the outlook.

The 4-hour chart shows no clear signs after several sessions of consolidation. The bias is modestly biased to the downside, and a break under 0.6630 would open the door for 0.6600. Below, emerges 0.6585 and then March lows at 0.6565. On the upside, the Aussie needs to recover 0.6675 to strengthen the short-term outlook.

Support levels: 0.6625 0.6585 0.6560

Resistance levels: 0.6675 0.6725 0.6755

View Live Chart for the AUD/USD

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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.

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