AUDUSD Forecast: Bulls happily adding at lower levels

AUDUSD Current Price: 0.6719

• Chinese news keep investors on their toes at the beginning of the week.
• US Dollar on the back foot amid speculation the US Federal Reserve will pivot.
• AUDUSD´s bullish potential intact, with near-term support in the 0.6660 price zone.

The AUDUSD pair is ending Monday with modest gains in the 0.6710 price zone, pressuring a fresh November monthly high. The pair slid throughout the first half of the day amid US Dollar near-term oversold conditions. Nevertheless, speculative interest saw it as a chance to short further the greenback, which somehow anticipates how things will go, at least until the next US Federal Reserve (Fed) meeting in a month. Hawkish comments from Fed officials may be ignored by market players unless Chief Jerome Powell explicitly says that December will bring a 75 bps rate hike.

The focus at the beginning of the day was on China, as the country keeps reporting record coronavirus contagions in Bejing and other big cities. The country has a zero-covid policy, which may lead to stricter lockdowns and the interruption of global shipments. The country reported the October Producer Price Index, which printed at 4.9% YoY, easing from the previous 5.4%. The Australian macroeconomic calendar had nothing to offer, although the Reserve Bank of Australia (RBA) will publish the Minutes of its latest meeting on Tuesday. China will release October Industrial Production and Retail Sales.

AUDUSD short-term technical outlook

The daily chart for the AUDUSD pair shows that it is battling to extend its rally beyond a mildly bearish 100 SMA while the 20 SMA gains upward traction well below the current level. Technical indicators have lost their bullish strength but hold near overbought readings, in line with another leg higher.

The near-term picture shows some divergences, but nothing that could confirm the bullish potential has come to an end. The 4-hour chart shows that the pair is developing well above bullish moving averages,  with the 20 SMA currently at around 0.6600. The Momentum indicator retreats sharply but holds within positive levels, while the RSI indicator remains flat at around 71. Buyers defend the downside at around 0.6660, with more chances of a corrective decline if the pair breaks below it.

Support levels: 0.6705 0.6660 0.6615

Resistance levels: 0.6745 0.6780 0.6825

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