AUD/USD outlook: Bears are positioning for fresh extension as expectation of rate cut weigh

Slobodan Drvenica Windsor Brokers

AUDUSD

The Aussie dollar bounces from new low at 0.6891 (the lowest since 3 Jan) in corrective action as daily stochastic reverses from oversold territory.
Overall picture remains bearish on both, daily and weekly chart and favors further downside, as bears were boosted by Wednesday’s close below key Fibo support at 0.6931 (61.8% retracement of 0.6643/0.7295 rally).
Weak Australian jobs data (Unemployment rose to 5.2% in Apr from 5.1% and 5.0% f/c while 28.4K new jobs were created in Apr vs 30K f/c) increase expectations for rate cut, the earliest in June and Aug cut now being fully priced in.
Limited corrective action is seen as positioning for fresh downside, as bears look for confirmation on repeated close below broken 0.6931 Fibo support, which now acts as initial resistance (reinforced by the base of thick falling hourly cloud).
Falling 5SMA (0.6948) marks next barrier, reinforced by hourly cloud top, guarding falling 10SMA (0.6974), break of which would sideline bears and signal stronger recovery.

Res: 0.6931; 0.6948; 0.6974; 0.7000
Sup: 0.6915; 0.6891; 0.6845; 0.6800

Interested in AUDUSD technicals? Check out the key levels

1. R3 0.6982
2. R2 0.6966
3. R1 0.6947
PP 0.6931
1. S1 0.6912
2. S2 0.6896
3. S3 0.6877

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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