AUD/USD Forecast: Sentiment leads the way

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.6931

NAB’s Business Confidence is expected to have contracted in the last quarter of 2022.
Wall Street edged lower while Treasury yields managed to hold ground.
AUD/USD pressures daily lows, in line with a continued decline on Thursday.

The AUD/USD pair peaked on Wednesday at 0.6995, a fresh weekly high, but finished the day in the red at around 0.6930. The US Dollar appreciated in the final trading session of the day, as Wall Street could not extend its Tuesday rally, but on the contrary, it edged lower.

US stocks trimmed a good bunch of their Federal Reserve Chair Powell-inspired gains and while government bond yields remained stable. The 10-year Treasury note currently yields 3.65%, while the 2-year note offers 4.46%.

Australia published the AIG Industry Index for December, a new compilation of business activity. It declined 11.6 points as manufacturing activity shrank in the month. On a positive note, the construction sub-component rose 11.4 bps. On Tuesday, the country will release Q4 NAB’s Business Confidence, foreseen at 5, down from 9 in Q3.

AUD/USD short-term technical outlook

The AUD/USD pair daily chart shows that it pressures its intraday low, usually a sign of another leg lower coming in Asia. The daily chart shows that the pair is currently developing below a flat 20 SMA, currently at around 0.7010, while technical indicators turned flat at around their midlines.

The pair is still neutral in the 4-hour chart, trading a handful of pips above a mildly bullish 200 SMA while hovering around a bearish 20 SMA. The Momentum indicator lacks directional strength above its midline, while the RSI indicator turned flat at around 42, skewing the risk to the downside. A break through 0.6900 should confirm a downward continuation on Thursday.

Support levels: 0.6900 0.6850 0.6805

Resistance levels: 0.6965 0.7000 0.7045

View Live Chart for the AUD/USD

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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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