AUD/USD battles 20-DMA around 0.7030 on risk aversion

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  • Despite falling on Friday, AUD/USD is up 1.34% on the week.
  • Sentiment moved negative in the last hour, dragging AUD/USD lower.
  • AUD/USD Price Forecast: A daily close below the 20-DMA could pave the way for the all-time low below 0.6850.

The AUD is fighting against the 20 day moving average (DMA) and is losing the battle as the AUD/USD expects to resume the prevailing downtrend as the 50 DMA crosses below the 100 DMA, further confirming the bias. At 0.7030, AUD/USD reflects USD strength as sentiment has turned sour.

Sentiment fluctuated negative in the last hour, dragging AUD/USD lower

Earlier in the day, Wall Street opened higher, influenced by the positive sentiment carried over from the Asian and European sessions. The People’s Bank of China (PBoC) interest rate cut for the 5-year prime lending rate (LPR) from 4.60% to 4.45% was welcomed by investors, a sign that the Chinese authorities would continue to supporting the economy, despite Covid-19 zero tolerance restrictions. However, the mood changed in the last hour.

Over the week, the Australian dollar benefited from positive employment data, despite the Wage Price Index (WPI) rising below estimates. However, full-time employment beat expectations, and the unemployment rate fell, pushing AUD/USD above 0.7070, weekly highs.

On Friday, the story is different, as risk aversion, which has manifested itself since FX traders ignored Thursday, is taking its toll on AUD/USD, causing the major currency to drop below the DMA of 20 and threatens to open the door for a move towards 0.7000.

In the US, an absent economic docket, witnessed earlier in the week by several statements from Fed members, is not doing much for the USD, which is strengthening in the session, as reflected by the US dollar index, which has risen 0.26% and has broken back above the 103,000 level.

AUD/USD Price Forecast: Technical Outlook

AUD/USD continues to have a bearish bias, despite Thursday’s rally which saw the pair break out of the 0.7050 towards weekly highs. A Friday daily close below the 20-DMA at 0.7039 would expose the major to selling pressure.

Therefore, the path of least resistance from the major continues to the downside. The first support of the AUD/USD would be 0.7000. A break below would expose the 0.6900 level, followed by the lower band of the Bollinger Band indicator at 0.6850, and then the year low at 0.6828.

Technical levels

AUD/USD

Panorama
Last Price Today 0.7042
Today’s Daily Change -0.0006
Today’s Daily Change % -0.09
Today’s Daily Opening 0.7048
Trends
20 Daily SMA 0.7053
50 Daily SMA 0.7279
100 Daily SMA 0.7238
200 Daily SMA 0.7264
levels
Previous Daily High 0.7073
Previous Daily Minimum 0.6952
Previous Maximum Weekly 0.7074
Previous Weekly Minimum 0.6828
Monthly Prior Maximum 0.7662
Previous Monthly Minimum 0.7054
Daily Fibonacci 38.2% 0.7027
Daily Fibonacci 61.8% 0.6998
Daily Pivot Point S1 0.6976
Daily Pivot Point S2 0.6903
Daily Pivot Point S3 0.6854
Daily Pivot Point R1 0.7097
Daily Pivot Point R2 0.7146
Daily Pivot Point R3 0.7219

Source: Fx Street

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