AUD/USD Daily Forecast – Support At 0.7340 Stays Strong

AUD/USD Video 01.12.20.

U.S. Dollar Is Losing Ground Against Australian Dollar

AUD/USD received support at 0.7340 and is trying to get back above the resistance at 0.7360 as the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently testing the nearest support level at 91.75. If the U.S. Dollar Index manages to settle below this level, it will move towards the next support at the yearly lows at 91.50 which will be bullish for AUD/USD.

Today, the Reserve Bank of Australia left the interest rate unchanged at 0.10%, in line with analyst estimates. The Bank noted that the economic recovery was progressing well and that the recent economic data was better than expected.

The Bank reiterated that it would not increase the interest rate before the actual inflation is within the 2-3% range. According to the Bank’s forecast, inflation will reach 1.5% in 2022 so the interest rate will likely remain at the bottom for years.

Today, Australia reported that Manufacturing PMI increased from 54.2 in October to 55.8 in November. Building Permits increased by 3.8% month-over-month in October compared to analyst consensus which called for a decline of 3%. Foreign exchange market traders will also have a chance to evaluate the final reading of U.S. Manufacturing PMI which is projected to grow from 53.4 to 56.7.

Technical Analysis

AUD/USD failed to settle below the support at 0.7340 and is trying to settle back above the nearest resistance level at 0.7360.

If this attempt is successful, AUD/USD will move towards the next resistance level at 0.7380. In case AUD/USD settles above the resistance at 0.7380, it will head towards the next resistance at the recent highs at 0.7400.

The resistance level at 0.7400 has already been tested several times and proved its strength. Most likely, AUD/USD will need additional upside catalysts to move above this level.

On the support side, the nearest support level for AUD/USD is located at 0.7340. If AUD/USD manages to settle below this level, it will gain downside momentum and get to the test of the next support level at 0.7325.

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