AUD/USD Forecast: Rebound capped by 0.6550
AUD/USD Current Price: 0.6538
- The Australian Dollar rose modestly in a quiet session amid holidays.
- Improvement in market sentiment weighed on the US dollar.
- AUD/USD rebounded further from monthly lows but encountered resistance at the 0.6550 area.
On Monday, the AUD/USD climbed for the second consecutive trading day, extending its recovery from monthly lows. However, the 0.6550 area capped gains and thin volume across financial markets kept the pair in a small range around 0.6540 during the American session.
On Tuesday, price action will likely pick up as Europe and the US return to activity after the holidays. In Australia, economic data due includes April Building Permits for April, ahead of Wednesday's critical Consumer Price Index. Next week, the Reserve Bank of Australia will announce its decision on monetary policy.
The US dollar dropped modestly on Monday, following Sunday's debt ceiling agreement in the US. Still, Congress needs to pass the law, and it is not a risk-free event. The US will report housing data and the Dallas Fed Manufacturing Index on Tuesday. The week's key report will be on Friday, with the US official employment report.
AUD/USD short-term technical outlook
The AUD/USD reached a bottom last Friday at 0.6489, the lowest level since mid-November. However, the Aussie recovered quickly, reaching the 0.6500 mark. The rebound extended on Monday until finding resistance at the 0.6555 area. A break above 0.6560 would point to a test of the next resistance at 0.6580, followed by 0.6605. Above the latter, the outlook would improve for the pair. While under 0.6640, the view is bearish.
On the 4-hour chart, the AUD/USD shows an upward bias in the very short term, holding above the 20-period Simple Moving Average (SMA). Technical indicators also point to the upside, with momentum about to break above midlines. A decline under 0.6520 would weaken the pair, exposing 0.6500 and the recent low.
Support levels: 0.6520 0.6485 0.6445
Resistance levels: 0.6555 0.6580 0.6610
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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.
