AUD to USD Forecast: Bears Eye Sub-$0.6450 on China Woes

Highlights

• It is the Monday after the US PPI Report, leaving investors to consider hawkish RBA chatter and Fed sentiment.
• Later today, investors should monitor the news wires for unscheduled Fed commentary following the US CPI and PPI numbers.
• The near-term technical indicators remain bearish, signaling a return to sub-$0.6450.

On Friday, the AUD/USD fell by 0.33% to end the day at $0.64933. RBA Governor Philip Lowe talked about further rate hikes but failed to limit the impact of hotter-than-expected US producer price index numbers on Friday.

This morning, there are no economic indicators from Australia or China to influence. The lack of economic indicators will leave the Aussie dollar in the hands of market risk sentiment throughout the morning session. China’s woes will leave the Aussie Dollar under pressure. However, a detailed stimulus package from Beijing would change the mood.

The US Session

It is a quiet US session, with no economic indicators to influence. The lack of US economic indicators will leave the AUD/USD in the hands of Fed chatter.

While no FOMC members are on the calendar to speak today, commentary with the media will move the dial. Despite sticky core inflation, the probability of the Fed standing pat in September increased from 87.0% to 90.0% last week. According to the CME FedWatch Tool, the chance of a 25-basis point September rate hike was just 10.0%. Hawkish chatter should move the dial.

AUD/USD Price Action

Daily Chart

The Daily Chart showed the AUD/USD hover below the $0.6526 – $0.6545 resistance band. Significantly, the Aussie remained below the 50-day ($0.66658) and 200-day ($0.67323) EMAs, sending bearish near and longer-term price signals.

The 50-day EMA fell further from the 200-day EMA, sending bearish price signals.

Looking at the 14-Daily RSI, the 34.26 reflects a bearish trend and supports a fall to the $0.6450 – $0.6430 support band. However, an AUD/USD move through the $0.6526 – $0.6545 resistance band would give the bulls a run at the lower level of the $0.6600 – $0.6620 resistance band.

4-Hourly Chart

Looking at the 4-Hourly Chart, the AUD/USD hovers below the $0.6526 – $0.6545 resistance band. Significantly, the AUD/USD remains below the 50-day ($0.65649) and 200-day ($0.66554) EMAs, sending bearish near and longer-term price signals.

The 50-day EMA pulled back from the 200-day EMA, a bearish price signal.

Looking at the 14-4-Houly RSI, the 37.84 reflects a bearish trend and supports a fall to the upper level of the $0.6450 – $0.6430 support band. However, an AUD/USD move through the $0.6526 – $0.6545 resistance band would give the bulls a run at the 50-day EMA ($0.65649).