AUD/USD Forecast: Still looking for direction, but well above 0.6700

AUD/USD Current Price: 0.6760

• A resilient US labor sector weighed on equities and boosted the Greenback on Thursday.
• Financial markets remain volatile as investors struggle to anticipate upcoming central banks’ decisions.
• AUD/USD is technically neutral in the near term, but bears have no chances unless 0.6700 gives up.

The AUD/USD pair trades around 0.6760, down almost 1% on Thursday amid broad US Dollar demand. After peaking at 0.6885 on Wednesday, the Australian Dollar aimed higher at the beginning of the day, helped by upbeat local data. The December S&P Global Services PMI was upwardly revised to 47.3 from 46.9, while the Composite index was confirmed at 47.5. Despite still indicating economic contraction, the figures suggest the economic setback could be near a bottom. Additionally, the Chinese Caixin Services PMI for the same month came in at 48, slightly better than the preliminary estimate of 47.5.

However, the poor tone of European indexes weighed on AUD/USD, which started easing mid-European morning. The slump accelerated ahead of Wall Street’s opening, following the release of upbeat US employment-related figures. The strength of the US labor market weighed on high-yielding stocks, with the three US major indexes plummeting while boosting demand for the American Dollar. Wall Street bounced off intraday lows ahead of the close, helping the pair to trim part of its intraday losses. Australia will not release macroeconomic data on Friday, with the focus on the December US Nonfarm Payrolls report.

AUD/USD short-term technical outlook

The daily chart for the AUD/USD pair shows that it has retreated from around a mildly bearish 200 SMA while holding above the 100 SMA. Both moving averages have limited the pair’s direction since late November. At the same time, the pair is currently hovering around a directionless 20 SMA, while technical indicators offer uneven directional strength around their midlines.

In the near term, and according to the 4-hour chart, the pair is neutral. It trades below a bearish 20 SMA, but met buyers at around a flat 200 SMA, providing dynamic support in the 0.6740 price zone. The Momentum indicator heads nowhere just above its 100 line, while the RSI aims marginally higher within negative levels, lacking strength enough to confirm an upward extension. Chances of a bearish continuation also seem limited, although the risk of such a move could increase on a break below the 0.6700 threshold.

Support levels: 0.6740 0.6700 0.6665

Resistance levels: 0.6795 0.6840 0.6875

View Live Chart for the AUD/USD