AUDUSD Forecast – Pressured as China’s COVID Protests Grow
The Australian Dollar is sharply lower on Monday as investors shed higher riskier currencies amid concerns that growing protests in China against the government’s zero COVID-policy would further undermine the world’s second-largest economy.
Over the weekend, waves of protests against China’s zero-COVID approach spread to many parts of the country as the number of COVID cases continued to hit record highs. That fueled concerns about the health of China’s economy and cast a pall over the global growth outlook, according to Reuters.
At 06:15 GMT, the AUDUSD is trading .6677, down 0.0078 or -1.15%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $66.77, up $0.05 or +0.07%.
In economic news, traders showed little reaction to a report that showed Australia’s retail sales suffered the first decline of the year. This provided proof that the Reserve Bank’s (RBA) interest rate hikes were working to cool red-hot demand.
Looking ahead, financial market traders are factoring in another quarter-point hike to 3.10% at the Reserve Bank of Australia’s December policy meeting next week.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum is trending lower following the confirmation of Friday’s closing price reversal top.
A trade through .6798 will reaffirm the uptrend. A move through .6585 will change the main trend to down.
The minor range is .6798 to .6585. The AUD/USD is currently straddling its pivot at .6692.
On the upside, the nearest resistance is a long-term 50% level at .6760. On the downside, the nearest support is a Fibonacci level at .6631, followed by a 50% level at .6543.
Daily Swing Chart Technical Forecast
Trader reaction to the pivot at .6692 is likely to determine the direction of the AUDUSD on Monday.
A sustained move under .6691 will indicate the presence of sellers. The first downside target is .6631, followed by the main bottom at .6585. A trade through this level will change the main trend to down with .6543 the next target.
A sustained move over .6692 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into .6760, followed by a pair of main tops at .6781 and .6798. Taking out the latter could trigger a surge into the Sept. 13 main top at .6916.