Market Overview

AUD/USD Forecast: Under Pressure Despite Encouraging Australian Data, Bearish Below 0.7070

AUD/USD Forecast: Under Pressure Despite Encouraging Australian Data, Bearish Below 0.7070

AUD/USD Current Price: 0.7121

  • Australian manufacturing output improved in July, but investors weren’t impressed.
  • The Reserve Bank of Australia is having a monetary policy meeting this Tuesday.
  • AUD/USD under pressure despite encouraging Australian data, bearish below 0.7070.

The Australian dollar weakened against its US rival, although AUD/USD settled in the 0.7120 price zone after trading as low as 0.7075. Data coming from Australia and China was not enough to support the Aussie, undermined by the expansion of coronavirus in Victoria and the curfew announced to the area. For the record, the AIG Performance of Manufacturing Index improved in July to 53.5 from 51.5, while the Commonwealth Bank Manufacturing PMI surged to 54 from 53.4. Also, the TD Securities Inflation rose by 0.9% MoM and 1.3% YoY in July.  China published the July Caixin Manufacturing PMI, which resulted in 52.8, beating the expected 51.3 and the previous 51.2.

Stocks’ advance and gold prices holding near record highs have limited the pair’s decline, but considering the broad greenback’s weakness, it seems that the Aussie is not yet done with falling. This Tuesday, Australia will publish June Retail Sales and the Trade Balance for the same month. Also, the Reserve Bank of Australia is having a monetary policy meeting. The central bank is expected to maintain its current policy unchanged, particularly after the latest coronavirus developments in the country. Nevertheless, it’s too early for policymakers to show signs of worrying. Instead, it seems they would align with their overseas counterparts and maintain a wait-and-see stance.

AUD/USD Short-Term Technical Outlook

The AUD/USD pair is at risk of extending its decline, according to the 4-hour chart, as the pair has extended its decline below a now bearish 20 SMA. A mildly bullish 100 SMA provides support at around 0.7070. Technical indicators in the mentioned chart have bounced from near oversold readings but already lost their strength upwards well below their midlines, indicating limited buying interest.

Support levels: 0.7070 0.7030 0.6990

Resistance levels: 0.7150 0.7180 0.7225 

Image sourced from Pixabay


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