AUD/USD Daily Forecast – Test Of Resistance At 0.7700

AUD/USD Video 31.12.20.

Australian Dollar Remains Strong

AUD/USD gained strong upside momentum and is currently trying to settle above the resistance at 0.7700 while the U.S. dollar continues to lose ground against a broad basket of currencies.

The U.S. Dollar Index received some support near 89.55 but remains under significant pressure at the end of the year. If the U.S. Dollar Index gets below 89.55, it will gain additional downside momentum which will be bullish for AUD/USD.

Today, the Australian dollar is supported by positive PMI data from China. China’s Manufacturing PMI decreased from 52.1 to 51.9 compared to analyst consensus of 52. Non Manufacturing PMI decreased from 56.4 to 55.7. Numbers above 50 show expansion. While the pace of the rebound of the Chinese economy is decreasing, it remains strong which is good for the Australian economy.

In addition to China’s PMI reports, foreign exchange market traders will focus on U.S. Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims are expected to increase from 803,000 to 833,000 while Continuing Jobless Claims are projected to grow from 5.34 million to 5.39 million.

Technical Analysis

AUD/USD managed to settle above the resistance at 0.7675 and is trying to settle above the next resistance level at 0.7700. RSI is already close to December highs so the risks of a pullback are increasing.

In case AUD/USD manages to settle above 0.7700, it will head towards the next resistance level at 0.7730. A successful test of the resistance at 0.7730 will open the way to the test of the next resistance at 0.7760.

On the support side, the previous resistance level at 0.7675 will likely serve as the first support level for AUD/USD. In case AUD/USD declines below this level, it will gain downside momentum and head towards the next support level at 0.7635. A move below the support at 0.7635 will push AUD/USD towards the next support at 0.7600.

From a big picture point of view, AUD/USD managed to rebound from November lows at 0.7000 to 0.7700 without any notable pullback so it may become very sensitive to any news that may trigger profit-taking.

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