AUD/USD Forecast: Points to consolidation around 0.6700 if the Dollar permits

AUD/USD Current Price: 0.6699
- US Dollar holds a bullish tone supported by US data.
- A decline in commodity prices weighs on Australian Dollar.
- AUD/USD is back in a familiar range, likely to consolidate around 0.6700.
The AUD/USD continues to retreat from monthly highs amid a stronger US Dollar. The pair dropped over a hundred pip from Friday’s top, falling below 0.6700. The main driver is the recovery of the Greenback, while the decline in commodity and equity prices did not help the Aussie.
On Tuesday, the Reserve Bank of Australia (RBA) will release the minutes of its latest monetary policy meeting, when it decided to pause its tightening cycle after ten consecutive rate hikes. The RBA is now assessing the impact of the cumulative hikes. For now, the RBA is seen extending its pause in May.
China kept its 1-year Medium-term Lending Facility (MLF) rate steady at 2.75% and the net injection via the MLF was CNY 20 billion, the smallest since November of last year. On Tuesday, China reports Q1 GDP, March Retail Sales and Industrial Production. Market consensus point to an expansion in GDP of 4.0% YoY.
The US Dollar was the best performer on a quiet Monday as Federal Reserve tightening expectations increased. Current prices suggest around 90% odds of a last 25 basis points rate hike at the May meeting. Also, the odds of rate cuts later in 2023 diminished. As a consequence, US yields are higher, benefiting the US Dollar. The Greenback extended Friday’s up move and remains with a positive tone, but it is facing resistance across the board.
AUD/USD short-term technical outlook
On the daily chart, the AUD/USD failed to hold above the 55, 100 and 200-period Simple Moving Average, pulling back into a familiar price range around 0.6700. The Aussie needs to break clearly above 0.6800 to open the door to more gains.
Ahead of the Asian session, risks are titled modestly to the downside; however, the AUD/USD seems comfortable in the 0.6680 - 0.6720 range. At the same time, the Relative Strength Index (RSI) is flattening around 50 as well asMomentum around its mid-line. Above 0.6730, more gains seem likely with the next resistance at 0.6760. Below 0.6680, the bearish pressure would expose 0.6630.
Support levels: 0.6680 0.6630 0.6600
Resistance levels: 0.6720 0.6760 0.6800
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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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