AUD/USD Forecast: Coronavirus developments may hit the Aussie
AUD/USD Current Price: 0.7142
- Australia starts a busy week reporting manufacturing and inflation data.
- Victoria’ officials toughen its social distancing measures after announcing a state of disaster.
- AUD/USD retains its long-term bullish bias but could fall in the upcoming sessions.
The AUD/USD pair pulled back from 0.7226, its highest in over a year, to finish Friday in the red, but the week in the green at 0.7142. The Aussie found support on upbeat Chinese data, as the July NBS Manufacturing PMI printed 51.1 against 50.7 expected, while the Non-Manufacturing PMI for the same month, printed at 54.2 vs. 51.2 expected. Australian data, however, missed expectations, with Producer Prices down 1.2% in the second quarter of the year.
Weekend news were worrisome as Victoria’ officials toughen its social distancing measures after announcing a state of disaster. The measures come after the Melbourne area reporter over 670 new coronavirus cases on Sunday and will extend the current lockdown for another six weeks. The country will start the week reporting the July AIG Performance of Manufacturing Index, previously at 51.5, and TD Securities Inflation for the same month. The pandemic developments, however, could take their toll on the Aussie and overshadow macroeconomic figures.
AUD/USD short-term technical outlook
According to the daily chart, the AUD/USD pair retains its bullish stance, as the pair continues to develop above a firmly bullish 20 DMA, which advances above the larger ones. Technical indicators have lost their bullish strength, but remain well above their midlines. In the 4-hour chart, however, the risk is skewed to the downside, as the pair broke below its 20 SMA, while technical indicators stabilized within negative levels. Further declines are to be expected on a break below 0.7120, Thursday low and the immediate support level.
Support levels: 0.7120 0.7070 0.7030
Resistance levels: 0.7180 0.7225 0.7260
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