AUD/USD Forecast: Supported by a weaker Dollar, more gains likely above 0.6720
AUD/USD Current Price: 0.6706
- The Australian employment report surpassed expectations.
- Despite upbeat US data, the US Dollar remains under pressure.
- The AUD/USD maintains strong bullish momentum, trading at four-month highs.
The AUD/USD is maintaining a strong position at four-month highs, although it has not been able to hold above 0.6700 firmly. The pair continues to rally, supported by broad-based weakness in the US Dollar, as well as positive Australian economic data providing some additional boost.
Labor market data from Australia exceeded expectations in November. Employment increased by 61,500, surpassing the expected figure of 11,000. This marks the second consecutive month of robust employment data. The unemployment rate rose from 3.8% to 3.9% due to a rise in the participation rate, which reached a record high.
The Australian Dollar (AUD) received a modest boost after the release of the labor market data. The weakness of the US Dollar drove most of the rally during the Asian session. AUD/NZD climbed to two-week highs above 1.0800, also driven by weaker-than-expected New Zealand Q3 GDP data.
The primary driver for AUD/USD remains the decline of the US Dollar following the FOMC December meeting, which is viewed as a turning point for the central bank. However, the data released from the US on Thursday showed better-than-expected numbers, contributing to a recovery of the US Dollar. Retail Sales surprised with an unexpected 0.3% increase in November, and Initial Jobless Claims dropped to 202,000, the lowest level in eight weeks.
The preliminary December reading of the Australian PMI is due early on Friday. From the US, reports include the Empire Manufacturing Index, Industrial Production, and the S&P Global PMI.
AUD/USD short-term technical outlook
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The AUD/USD has risen for the second consecutive day on Thursday, accumulating a gain of over 150 pips. The rally pushed the Relative Strength Index (RSI) to levels near 70 in the daily chart, indicating potential overbought conditions. However, the bias in the chart remains upward, with price above key bullish simple moving averages (SMA). The pair is within an ascendant channel, with the upper limit standing at 0.6770, which is expected to hold. The critical support level is located at 0.6550.
On the 4-hour chart, the Moving Average Convergence Divergence (MACD) remains firmly bullish, although the RSI shows signs of turning downwards from above 70. Momentum appears to be flattening, suggesting a potential consolidation ahead. Despite this, the negative tone of the Dollar and the ongoing bullish impulse hints that the rally could still have room to extend further north, particularly if the price consolidates above 0.6720. On the downside, a break below 0.6680 would result in a loss of momentum for the Aussie. A correction could extend to near 0.6615 without changing the bullish short-term outlook.
Support levels: 0.6680 0.6620 0.6585
Resistance levels: 0.6740 0.6760 0.6795
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.
