- AUD/USD is down 0.30% on the day and 2.03% on the week.
- Sentiment remains negative, although the Australian dollar rises from daily lows.
- AUD/USD Price Forecast: Major is in a downtrend and a move towards 0.7000-50 could be an opportunity for the bears as they target 0.6500.
The Australian dollar is surmounting three consecutive days of losses against the dollar despite being hit by negative economic data from China, which showed exports slowed to their lowest level in almost two years as the zero tolerance policy stopped factory production. At 0.6952, the AUD/USD is making up some ground on Tuesday.
At the end of the American session, market sentiment turned negative, except for the Nasdaq 100. The Federal Reserve tightening as it battles inflation four times its target, the Covid-19 crisis in China and the war between Ukraine and Russia weigh on the mood of the market. consequently, affecting risk-sensitive currencies such as the Australian dollar.
Fed members dominate Tuesday’s headlines
The Fed parade continued on Tuesday with John Williams of the New York Fed, Thomas Barkin of Richmond and Loretta Mester of Cleveland. All agreed to 50bp hikes at the June and July meetings, while Mester added that the Fed would not rule out 75bp hikes if needed.
At the time of writing, Fed Governor Christopher Waller was crossing the wires, saying that inflation is too high and it is the Fed’s job to bring it down. He is in favor of frontloading rates and stressed that now is the time to hit rate hikes because the economy can take it.
On Monday, reports from China showed its exports slowed to their weakest level in nearly two years as Covid-19-related restrictions halted factory output and hurt domestic demand. At the end of the week, the Chinese inflation rate and the prices paid by producers will shed some light on a possible “stagflation” scenario in the world’s second largest economy.
Meanwhile, the Australian docket, released in the Asian session, Retail Sales and Business Confidence failed to lift AUD/USD above the 0.7000 figure. The former was in line with the 1.6% forecast, while business confidence dipped from 12 to 10. Later in the session, at around 12:30 GMT, Westpac consumer confidence is estimated to fall from the previous month. 95.7 to 94.7.
Meanwhile, the US economic docket will feature additional statements from Fed members; Neil Kashkari, is next. In terms of data, US inflation figures are due out on Wednesday, followed by producer prices on Thursday and consumer sentiment on Friday.
AUD/USD Price Forecast: Technical Outlook
From a daily chart perspective, AUD/USD remains under pressure to the downside. The MACD is pointing lower, further confirming the above as the AUD/USD bears are targeting the 0.6500 price level.
The first support of the AUD/USD would be 0.6900. A break of the latter would expose the June 2020 low around 0.6776. Once cleared, it would expose May 2020 swing highs around 0.6616, followed by 0.6500.
Technical levels
Source: Fx Street
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