- AUD/USD is still trading in the red, currently down 1.90%.
- Global factory activity slowed, with the exception of the US, which remains in expansion territory.
- AUD/USD: Could form an inverse head and shoulders if buyers keep prices above 0.6881; otherwise 0.6402 is the next target.
On Thursday, the AUD/USD fell to seven-week lows amid a surge of risk aversion, while the US dollar, according to a measure of the value of the greenback against a basket of peers, namely the US dollar index, rises to highs of 20 years around 109,997. At the time of this writing, the AUD/USD is trading at 0.6786.
US equities continue to decline, reflecting investor sentiment. US economic data, led by August ISM Manufacturing PMI, which measures US factory activity, rose by 52.3, in line with previous month’s readings, above estimates , which propelled the dollar to new all-time highs. Additionally, US jobless claims rose by 232,000, below the 248,000 forecast by analysts.
AUD/USD tumbled from around 0.6830 to daily lows of 0.6771. US employment indicators confirm the Fed’s intentions to hike rates aggressively at the September meeting.
Another factor weighing on risk sentiment and the Australian dollar is the Covid-19 lockdowns in Chengdu, which put 21.2 million residents in isolation. In addition, China’s Caixin PMI for August contracted, fueling expectations that its economic slowdown could spread worldwide, a signal that could trigger a global recession.
What to do
An absent Australian economic docket would leave AUD/USD traders leaning on US dollar dynamics. The non-farm payroll report for August will be released on the US calendar, along with the unemployment rate and median hourly earnings.
AUD/USD Price Analysis: Technical Outlook
AUD/USD extended its losses for the third day in a row, approaching a falling trend line from five months ago, broken around July 27, which was set to become support. If AUD/USD buyers stop losses above the year low at 0.6681, an inverse head and shoulders chart pattern could form. Otherwise, the downtrend would resume and AUD/USD sellers would target the May 15, 2020 lows at 0.6402.
|Last Price Today||0.6788|
|Today’s Daily Change||-0.0053|
|Today’s Daily Change %||-0.77|
|Today’s Daily Opening||0.6841|
|20 Daily SMA||0.6956|
|50 Daily SMA||0.6911|
|100 Daily SMA||0.701|
|200 Daily SMA||0.7127|
|Previous Daily High||0.6905|
|Previous Daily Minimum||0.6835|
|Previous Maximum Weekly||0.701|
|Previous Weekly Minimum||0.6855|
|Monthly Prior Maximum||0.7137|
|Previous Monthly Minimum||0.6835|
|Daily Fibonacci 38.2%||0.6862|
|Daily Fibonacci 61.8%||0.6878|
|Daily Pivot Point S1||0.6816|
|Daily Pivot Point S2||0.679|
|Daily Pivot Point S3||0.6746|
|Daily Pivot Point R1||0.6886|
|Daily Pivot Point R2||0.6931|
|Daily Pivot Point R3||0.6956|
Source: Fx Street
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