AUD/USD Forecast: No signs of bottoming despite extreme oversold conditions

AUD/USD Current Price: 0.7477

• Australian Retail Sales expected at 0.7% in May, according to preliminary estimates.
• Gold prices plummeted, dragging alongside the Australian currency.
• AUD/USD closed at its lowest for the year, could extend its decline in the near-term.

The AUD/USD pair settled at 0.7477, its lowest for this year, as demand for the American currency coupled with falling stocks to the detriment of the Australian dollar. The absence of fresh Australian data and plummeting gold prices added to the bearish case, as the bright metal fell to 1,760.87 a troy ounce, its lowest in almost two months.

Over the weekend, news indicated that Australia would take China to the World Trade Organization over Beijing's imposition of tariffs on the country's wine. The industry exports plummeted from about $1.1 billion to just $20 million in the last months and it is part of multiple measures taken by the Chinese government against Australian products after the latter supported an investigation over the origins of COVID-19. Data wise, Australia will publish the preliminary estimate of May Retail Sales at the weekly opening, foreseen up 0.7% MoM.

AUD/USD short-term technical outlook

The AUD/USD pair daily chart shows that the pair has broken below all of its moving averages, accelerating its decline after piercing the 200 SMA, now providing dynamic resistance around 0.7550. In the meantime, technical indicators head firmly south despite developing in oversold readings, without signs of bearish exhaustion. The picture is quite alike in the 4-hour chart, with technical indicators heading lower in extreme oversold readings, as the pair develops far below bearish moving averages.

Support levels: 0.7460 0.7420 0.7375

Resistance levels: 0.7510 0.7550 0.7590

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