AUD/USD Daily Forecast – Australian Dollar Pulls Back After Yesterday’s Upside Move

AUD/USD Video 07.01.21.

U.S. Dollar Moves Higher Against Australian Dollar

AUD/USD failed to settle above 0.7800 and pulled back while the U.S. dollar gained some upside momentum against a broad basket of currencies.

The U.S. Dollar Index made an attempt to settle below the support at 89.40 but failed to develop sufficient downside momentum and rebounded closer to 89.65. The nearest resistance level for the U.S. Dollar Index is located at 89.75. If the U.S. Dollar Index settles above this level, it will head towards the next resistance at the 90 level which will be bearish for AUD/USD.

Today, foreign exchange market traders will focus on the latest political developments in the U.S. which include the recent unrest in Washington and Democrats’ victory in Georgia Senate elections. At this point, the impact of the recent turmoil was limited, and the U.S. dollar continued to trade near the yearly lows.

The Democratic victory caused a sell-off in the bond market, and the 10-year U.S. government bond yield rose to 1.06%. The major move in the bond market may ultimately have an impact on the foreign exchange market but traders may need more time to make any major moves.

Australia has recently reported that Building Permits grew by 2.6% month-over-month in November compared to analyst consensus which called for growth of 2.5%. Australian housing market remains in a decent shape thanks to the country’s success in its battle against coronavirus.

Technical Analysis

AUD/USD is currently moving towards the nearest support level at 0.7760. RSI has declined from recent highs but remains in the overbought territory.

If AUD/USD declines below this level, it will head towards the next support at 0.7740. A successful test of the support at 0.7740 will open the way to the test of the next support at 0.7700.

On the upside, the nearest resistance level for AUD/USD is located at 0.7800. In case AUD/USD manages to settle above this level, it will head towards the next resistance which is located at the recent highs at 0.7820. A move above this level will open the way to the test of the next resistance at 0.7840.

For a look at all of today’s economic events, check out our economic calendar.