AUD/USD Forecast: Pointing to 0.6800 as the US Dollar remains weak

Matías Salord FXStreet

AUD/USD Current Price: 0.6765

The US Dollar continues to face pressure as Santa’s rally persists.
The AUD/USD attained new monthly highs but experienced a loss of momentum.
The next target is at the 0.6800 area, while the immediate key support is at 0.6730.

The AUD/USD reached its peak on Wednesday at 0.6778, marking the highest intraday level in almost five months, before experiencing a modest pullback. The pair is maintaining its recent gains supported by a positive risk appetite and a weaker US Dollar.

The Greenback continues to be affected by market participants reassessing positions after last week’s FOMC meeting. Economic data from the US released on Wednesday showed the CB Consumer Confidence rising to a five-month high in December at 110.7. Additionally, Existing Home Sales rebounded from a five-month decline, reaching an annual rate of 3.82 million, surpassing the market consensus of 3.77 million.

However, these economic figures did not aid the Dollar's performance. On Thursday, market participants will closely scrutinize the Jobless Claims data and the Philly Fed. Also scheduled is a new estimate of Q3 GDP (old news). On Friday, the Federal Reserve’s preferred gauge of inflation, the Core Personal Consumption Expenditure (Core PCE), is due.

Incoming information could potentially help the US Dollar in recovering some of its recent losses or trigger further declines. The Australian Dollar, on the other hand, relies on the continuation of the positive risk sentiment to maintain its focus on the 0.6800 level.

AUD/USD short-term technical outlook

The AUD/USD is on its way to the highest daily close since late July. The daily chart shows the pair remains within an ascending channel. The upper limit of the formation should restrict the upside around 0.6810 if the pair surpasses 0.6800. A breakout above 0.6810 could trigger a bullish acceleration. On the downside, the lower boundary of the channel stands near 0.6600, closely aligned with the 20-day Simple Moving Average (SMA).

On the 4-hour chart, the bias is to the upside; however, technical indicators do not show enough conviction for the Aussie to reach fresh highs. Technical indicators, including the Relative Strength Index (RSI) and Momentum have turned south. This favors a consolidation with a slight inclination towards the downside ahead of the Asian session. A crucial support level in the short term is at 0.6730, represented by the 20-SMA and a horizontal level. Below that level, the correction could extend to 0.6700. Above 0.6780, the Aussie would recover momentum.

Support levels: 0.6730 0.6690 0.6660

Resistance levels: 0.6780 0.6810 0.6835

View Live Chart for the AUD/USD

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.

AUD/USD looks offered just above 0.7100

AUD/USD has extended Monday’s pessimism, briefly breaching below the key. 0.7100 contention zone to hit three-day lows. The firmer tone in the Greenback has been keeping the Aussie under pressure while investors continued to gear up for the upcoming Trump-Xi Summit on Thursday.

USD/JPY holds small gains near 157.50 as JPY intervention risks loom

USD/JPY posts modest gains while trading near 157.50 in the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. Meanwhile, the US Dollar retains a bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, providing tailwinds for the pair.

Gold makes a U-turn; focus shifts to $4,400

Gold regains balance and now trades with decent gains, approaching the key $4,400 mark per troy ounce on Tuesday. The yellow metal’s advance comes despite the resumption of the buying interest in the US Dollar, mixed US Treasury yields and geopolitical uncertainty.

XRP retains bullish outlook despite paring gains above $1.50

Ripple (XRP) trades elevated above $1.52 on Tuesday despite experiencing a minor correction from the previous day’s high of $1.57. XRP framed the uptrend last week, rising alongside the broader bullish cryptocurrency market.

Trump meets Xi: Why markets are watching this summit so closely

United States (US) President Donald Trump and Chinese President Xi Jinping are set to meet in Washington on Thursday for a summit closely watched by markets. After several months of easing trade tensions between the US and China, the meeting could determine whether the world's two largest economies extend their truce or enter a new period of uncertainty.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.