AUD/USD Daily Forecast – Test Of Resistance At 0.7730

AUD/USD Video 04.01.21.

Australian Dollar Starts The Week On A Strong Note

AUD/USD continues to move higher and is testing the nearest resistance level at 0.7730 while the U.S. dollar remains under pressure against a broad basket of currencies.

The U.S. Dollar Index is currently moving towards the nearest support level which is located at the recent lows at 89.55. If the test of this level is successful, the U.S. Dollar Index will gain additional downside momentum which will be bullish for AUD/USD.

Today, Australia reported that Manufacturing PMI decreased from 55.8 in November to 55.7 in December. In China, which is Australia’s main trading partner, Manufacturing PMI declined from 54.9 to 53.0.

Numbers above 50 show expansion, and riskier currencies remain in demand on the foreign exchange market as traders bet on the continuation of the economic recovery.

Australian dollar is also supported by the country’s success in the battle against coronavirus. New South Wales, which is Australia’s most populous state, has recently reported zero new cases of the disease.

Technical Analysis

AUD/USD managed to get above the resistance at 0.7700 and is trying to settle above the next resistance level at 0.7730. RSI is very close to December highs so the risks of the pullback are significant, but the current upside momentum remains strong.

In case AUD/USD gets above the resistance at 0.7730, it will move towards the next resistance level at 0.7760. A successful test of the resistance at 0.7760 will open the way to the test of the resistance at 0.7775.

I’d note that AUD/USD has not visited this territory for several years so it remains to be seen whether previous levels will be relevant for today’s trading.

On the support side, the previous resistance at 0.7700 will likely serve as the first support level for AUD/USD. In case AUD/USD declines below this level, it will head towards the next support at 0.7675. A move below the support at 0.7675 will push AUD/USD towards the support at 0.7635.

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