Market Overview

AUD/USD Forecast: Trades At Multi-Month Highs With No Signs Of Upward Exhaustion

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  • Upbeat Chinese data underpinned the Aussie at the beginning of the day.
  • The Reserve Bank of Australia is having a policy meeting this Tuesday, rates seen on hold at 0.25%.
  • AUD/USD trades at multi-month highs with no signs of upward exhaustion.

The AUD/USD pair soared to 0.6802, a level that was last seen in January this year, on the back of the dollar’s broad weakness and upbeat Chinese data. China reported during the weekend that its manufacturing and services output remained in expansion territory in May, confirmed on Monday by the Caixin Manufacturing PMI which rose in May to 50.7 from 49.4 in April. Also, Australian data came in better than anticipated, as the AIG Performance of Manufacturing Index surged to 41.6 in May from 35.8 in the previous month, while the Commonwealth Bank Manufacturing PMI came in at 44 in the same month.

This Tuesday, the RBA will have a monetary policy meeting and is expected to keep rates at a record low of 0.25%. Governor Lowe has made it clear that rates will remain at record lows for long, although he has remained optimistic about economic developments within the ongoing pandemic, somehow suggesting policymakers will remain on hold this time.

AUD/USD short-term technical outlook

The AUD/USD pair is pressuring the mentioned daily high as the US session comes to an end, usually a sign that bulls are willing to push the pair even higher. The 4-hour chart shows that technical indicators have lost bullish strength, but they hold well into overbought levels, with no signs of changing course. Meanwhile, moving averages maintain their bullish slopes below the current level, with the 20 SMA at around 0.6665.

Support levels: 0.6740 0.6700 0.6665

Resistance levels: 0.6815 0.6850 0.6890

 

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Posted-In: Forex Markets