The AUD/USD currency pair on Friday plunged to trade at a new 6-week low of 0.6817 before attempting a late recovery to settle at 0.6824. The currency pair has been trading in a descending channel since the middle of last week. This seems set to continue through next week.
The pair has since dropped to trade close to the oversold level of the RSI indicator in the 60-min chart. this comes amid increased selling pressure and could trigger the next rebound.
AUD/USD Fundamentals Overview
From a fundamental perspective, the AUD/USD currency pair is trading at the back of a relatively quiet period in the market. On Tuesday, Australia’s Westpac Consumer Confidence Index for January missed the expectation of -0.8% with -1.8%. And on Thursday, Consumer Inflation Expectations beat 3.8% with 4.7%.
The Employment Change for December also impressed with 28.9k versus 15k expected, down from 35.7k in the previous period. The Australian unemployment rate also improved to 5.1% down from 5.2% in the previous period, beating the expectation of 5.2%. The preliminary Commonwealth Bank Manufacturing PMI for January slightly beat the expectation of 49 with 49.1.
In the US, the preliminary Markit Manufacturing PMI for January missed the expectation of 52.5 with 51.7. On the other hand, the Services PMI and the PMI Composite beat the expectations of 52.9 and 52.5, respectively with 53.2 and 53.1.
AUD/USD Technical Analysis (the 60-min Chart)
Technically, the AUD/USD currency pair appears to be experiencing intense short-term bearish pressure in the market sentiment. The pair is trading in a sharply descending channel and has recently dropped towards oversold levels of the RSI Indicator.
Therefore, the bears will be targeting short-term profits at around 0.6806 or lower at 0.6780. On the other hand, the bulls will hope to initiate a strong rebound by targeting profits at around 0.6851 or higher at 0.6878.
AUD/USD Technical Analysis (the Daily Chart)
In the daily chart, the AUD/USD currency pair appears to be trading within an ascending channel off a wider descending channel. This indicates an attempt by the bulls to take long-term control of the pair in the market. However, the bears appear to be clinging on by trying to pull the pair back to the descending channel.
Therefore, the bears will be targeting long-term profits at around 0.6750 or lower at 0.6670. On the other hand, the bulls will look to keep the bull run going by targeting profits at around 0.6923, 0.7019 or higher at 0.7093.