AUD/USD Forecast: Time for consolidation

Matías Salord FXStreet

AUD/USD Current Price: 0.6542

RBA minutes and Bullock's comments fail to lift the Australian Dollar.
US Dollar gains momentum after US Economic data, as US yields rebound.
The AUD/USD retreats further after testing the 200-day SMA, finding support at 0.6520.

The AUD/USD retreated further on Wednesday to the 0.6520 area before rebounding modestly. The short-term outlook suggests that the pair could continue to hover around current levels as the US Dollar stabilizes, although the path of least resistance remains to the upside, with the US Dollar still under some pressure.

Despite the Reserve Bank of Australia (RBA) minutes and Governor Michele Bullock's comments, the market continues to see no rate hikes. The interest rate market indicates slightly more than a 20% chance of a hike at the February meeting.

On Thursday, the Judo Bank PMIs are due. In October, both the Services and Manufacturing sectors showed readings below 50; a recovery above that threshold could boost the Aussie.

Data from the US came in mixed on Wednesday but provided a boost to the ongoing Dollar correction. Initial Jobless Claims fell by 24,000 to 209,000 in the week ending November 18, a decline from three-month highs and below the market consensus of 225,000. Continuing Claims fell to 1.84 million in the week ending November 11. On the negative side, Durable Goods Orders tumbled by 5.1%, more than the expected 3.1% contraction.

The Greenback gained momentum as US Treasury yields rebounded to the upside. Risk appetite during the American session limited the Dollar's advance. The bias in AUD/USD still leans towards the upside as sentiment around the Dollar continues to be mainly negative. The US market will be closed on Thursday.

AUD/USD short-term technical outlook

The AUD/USD extended its decline after reaching the 200-day Simple Moving Average (SMA) on Tuesday at 0.6589. Technical indicators on the daily chart are biased to the upside, and the price remains above key SMAs, except for the 200-day SMA, which acts as a key resistance level.

On the 4-hour chart, technical indicators are offering mixed signals, and there is no strong conviction at the moment for another test of recent highs. The price is below the 20-SMA but found support at the 0.6520 zone. A decline below 0.6520 would expose 0.6500. Above 0.6570, another test of the 200-day SMA seems likely. Consolidation between 0.6520 and 0.6555 could continue ahead of the Asian session.

Support levels: 0.6520 0.6485 0.6460

Resistance levels: 0.6570 0.6590 0.6625

View Live Chart for the AUD/USD

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.

AUD/USD picks up bids above 0.7100 after RBA-speak

AUD/USD picks up bids above 0.7100 in the Asian session on Tuesday, following hawkish comments from RBA Assistant Governor Sarah Hunter and Governor Michele Bullock. However, escalating tensions in the Middle East and the Fed's hawkish outlook remain supportive of the bullish US Dollar undertone, which could limit the pair. The crucial Trump-Xi summit is later this week and remains in focus.

USD/JPY holds small gains near 157.50 as JPY intervention risks loom

USD/JPY posts modest gains while trading near 157.50 in the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. Meanwhile, the US Dollar retains a bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, providing tailwinds for the pair.

Gold recedes a tad; still above $4,300

Gold extends its decline for a second straight session, slipping below the $4,300 mark per troy ounce, just to regain some composure afterwards. The precious metal remains under pressure as expectations that the Fed will keep interest rates higher for longer continue to support US Treasury yields and the US Dollar.

Trump meets Xi: Why markets are watching this summit so closely

US President Donald Trump and Chinese President Xi Jinping are set to meet in Washington on Thursday for a summit closely watched by markets. The meeting could determine whether the world's two largest economies extend their truce or enter a new period of uncertainty.

Energy and risk markets remain in the driver’s seat

US stock markets rallied up 2.26% (Nasdaq) yesterday with AI/tech names leading the advance. The Nasdaq even tested the all-time high reached early June. The likes of the S&P 500 and EuroStoxx50 recovered up to 1.5%. Positive risk vibes and lower energy prices supported consolidation on bond markets following the past month’s heavy losses. European yield curves bull steepened.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.