AUD/USD Forecast: Mounting chances of a bearish extension

AUD/USD Current Price: 0.7641

• Australian Pert area announced a five-day lockdown amid a new coronavirus case.
• Chinese data released over the weekend came in below the market’s expectations.
• AUD/USD is at risk of extending its decline in the next few sessions.

Commodity-linked currencies were among those most affected by the poor performance of equities, with AUD/USD finishing the week in the red at 0.7641. The pair may accelerate its slump at the weekly opening, amid weekend news indicating a 5-day lockdown in the Pert area, due to a hotel worker infested with COVID-19. Authorities are concerned it may be one of the more contagious strains coming from the UK and South Africa.

Ahead of the opening, China published the January official NBS Manufacturing PMI, which resulted at 51.3, while the services index for the same month resulted at 52.4, both missing the market’s expectations. Australia will publish the January AIG Performance of manufacturing index, previously at 52.1, and the TD Securities Inflation report for the same month.

AUD/USD short-term technical outlook

The AUD/USD pair bottomed for the week at 0.7591, and the daily chart indicates that it’s gaining bearish momentum. The pair broke below its 20 SMA which now stands at around 0.7720. Technical indicators stand below their midlines with uneven directional strength, but still favoring another leg lower. In the near-term, and according to the 4-hour chart, the pair is below all of its moving averages, while technical indicators hover within negative territory, also supporting a bearish continuation in the near-term.

Support levels: 0.7605 0.7570 0.7530

Resistance levels: 0.7685 0.7720 0.7770

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