AUD/USD Forecast: Still looking bullish, but running out of time
AUD/USD Current Price: 0.6681
- Aussie weakens during Thursday’s American session.
- US Dollar attempts to stabilize as markets look for direction after central bank’s meetings.
- AUD/USD was rejected again from above 0.6750, shows problems holding above 0.6700.
The AUD/USD failed to hold on to gains during the American session amid a deterioration in market sentiment and retreat below 0.6700. The US Dollar remains weak following the FOMC meeting on Wednesday but it has started to recover ground. Friday’s economic numbers and equity performance are set to be key drivers of the pair.
Data released in the US on Thursday showed Initial Jobless Claims fell in the week ended March 18 to 191,000, a number better than expected. The Chicago Fed National Activity Index fell from 0.23 to -0.19 in March. The employment numbers helped the US Dollar momentarily, but later in the American session received a boost from a deterioration in risk appetite.
On Friday, the Judo Bank Flash Australia PMI is due; the Manufacturing index is expected to slow from 50.5 in February to 50.3 in March, and the Service index from 50.7 to 49.9. In their latest report, released March 1, Warren Hogan, Chief Economic Advisor at Judo Bank, said: “Results support the notion that Australian economic activity, after slowing down over the second half of 2022, is holding up in early 2023. Strong labour demand and elevated price indicators are consistent with a further modest increase in interest rates over the next six months.” Since then, the Reserve Bank of Australia raised interest rates by 25 bps, and the global banking crisis emerged.
Also, PMIs from Europe and the US will be released, offering important data about the health of the global economy that could influence market sentiment. Positive numbers could boost the AUD/USD, which is moving with a high correlation with stocks.
AUD/USD short-term technical outlook
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The AUD/USD rose again to the 0.6750 area in less than 24 hours and again, it was rejected, triggering a correction that gained momentum during Thursday’s American session with the pair falling below 0.6700.
The 4-hour chart shows the pair still moving above a key short-term uptrend line but technical indicators have turned south, favoring further slides. If the decline extends, the crucial level is 0.6675, where the 100- and 50-period Simple Moving Averages converge with an uptrend line. A break below would weaken the outlook for the Aussie.
A recovery of the AUD/USD will face resistance at 0.6725 before the critical 0.6750 area. A consolidation above the latter should initially point to further gains targeting 0.6770/80, where the 200-period Simple Moving Average emerges.
Support levels: 0.6675 0.6630 0.6590
Resistance levels: 0.6725 0.6755 0.6780
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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.
