AUD/USD Forecast: multi-year low about to be challenged

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.6694

Australian and Chinese manufacturing PMI to be out this Monday.
Chinese virus outbreak weighing on the Aussie as it continues spreading worldwide.
AUD/USD dangerously close to 0.6670, break below it should trigger a steeper decline.

The Australian dollar continues to be the weakest dollar’s rival, dragged lower by the market’s dismal mood triggered by Chinese woes. The coronavirus outbreak spurred concerns about global growth as many countries are suspending flights to and from the country. Trade would likely be affected next if the situation continues. The AUD/USD pair settled around 0.6690, not far from the one-decade low set last year at 0.6670.

Early Monday, Australia will release January TD Securities Inflation, previously at 1.4% YoY, the AIG Performance of Manufacturing Index, previously at 48.2, and December Building Permits, seen down by 3.0% monthly basis. More relevant, China will release the January Caixin Manufacturing PMI, foreseen at 51.3 from 51.5.

AUD/USD short-term technical outlook

The AUD/USD pair is extremely oversold in its daily chart, although technical indicators continue heading firmly lower, suggesting sellers are not yet done. The RSI is currently at 22, a level not seen throughout the last two years, while the pair stands far below all of its moving averages. In the shorter term, and according to the 4-hour chart, a bearish 20 SMA continues to head south although now at around 0.6730, reflecting the strength of sellers. Technical indicators have stabilized near oversold readings, without signs of downward exhaustion.

Support levels: 0.6730 0.6700 0.6670

Resistance levels: 0.6770 0.6805 0.6840

View Live Chart for the AUD/USD

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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