AUD/USD Forecast: Sentiment to set the tone in Asia
AUD/USD Current Price: 0.6792
- The Reserve Bank of Australia hiked by 50 bps as widely anticipated.
- Equities plunged as fears of global recession pushed investors into safe-haven assets.
- AUD/USD is correcting extreme oversold conditions in the near term.
The AUD/USD pair fell to 0.6760, its lowest since June 2020, holding nearby at the end of the American session. The pair peaked at 0.6894 during the Asian session and ahead of the Reserve Bank of Australia monetary policy decision. The central bank hiked the official cash rate by 50 bps to 1.35%, as widely anticipated by market participants. The news had a limited impact on the pair, although the accompanying statement put some pressure on the pair.
According to the document, policymakers are committed to doing what is necessary to return inflation to target while adding that the “size and timing of future interest rate increases will be guided by data and assessment of the outlook for inflation and the labour market.” The absence of hawkish guidance undermined demand for the aussie.
The American currency accelerated its advance amid lingering recession fears, advancing throughout the second half of the day as panic dominated financial markets. Global indexes plummeted with the sour tone of Wall Street, further weighing on AUD demand. The Asian macroeconomic calendar will be empty on Wednesday, which means sentiment will likely continue to set the tone.
AUD/USD short-term technical outlook
The daily chart for AUD/USD hints at further slides, as technical indicators maintain their firmly bearish slopes within negative levels as the pair develops below its moving averages. The 20 SMA has gained downward traction and currently provides dynamic resistance at around 0.6940.
The 4-hour chart shows that the pair is aiming to recover some of the ground lost as technical indicators turned higher, the Momentum crossing its midline to positive territory and the RSI bouncing from oversold levels. Nevertheless, the pair remains below a bearish 20 SMA, which remains below the longer ones, suggesting limited buying interest.
Support levels 0.6760 0.6725 0.6690
Resistance levels: 0.6805 0.6850 0.6890
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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.
