AUD/USD Forecast: Weaker Dollar supports bullish rebound


AUD/USD Current Price: 0.6425

  • The AUD/USD benefits from US Dollar weakness and rebounds.
  • The technical outlook has improved for the Australian currency, but the overall trend is still downwards.
  • Australian confidence reports are due on Tuesday, followed by employment data on Thursday and US CPI on Wednesday.

The AUD/USD had its best day in two weeks on Monday, helped by a correction of the US Dollar across the board and a rebound in commodity prices. The pair rose above 0.6400, momentarily surpassing the 20-day Simple Moving Average (SMA). If the positive investor sentiment prevails, the Aussie could extend the rebound. However, traders may wait until after the release of key US and Australian data before repositioning their trades.

Chinese consumer inflation turned positive in August, but the numbers came in line with expectations, suggesting persistent deflationary pressure. Nonetheless, the Asian market opened the week on a positive note, offering support to Antipodean currencies.

On Tuesday, the Westpac Consumer Confidence for September and the National Australia Bank’s Business Survey are due. The most important report from Australia will be the employment numbers on Thursday.

In the US, the next important report is due on Wednesday with the Consumer Price Index (CPI), which is crucial ahead of the FOMC decision on September 20. Market participants expect the Fed to remain on hold. Inflation numbers have the potential to influence monetary policy expectations and the US Dollar.

The US Dollar Index lost ground on Monday after rising for eight consecutive days. The correction boosted the AUD/USD. US yields remain in focus and are likely to continue that way until the release of US CPI numbers.

AUD/USD short-term technical outlook

On Monday, the AUD/USD peaked at 0.6450, the highest level in a week, and pulled back to the 20-day Simple Moving Average (SMA) at 0.6425. The patterns on the daily chart are showing some positive signs for the Aussie, but the primary trend is still downward. A daily close above 0.6500 would open the doors to a more sustainable recovery.

On the 4-hour chart, the bias is to the upside, but there is not much conviction. The failed attempt to hold above 0.6440 weakened the rebound. If the Aussie rises back above and holds above that level, it could extend to 0.6470. Further gains ahead of the session seem likely while above 0.6420. Below that level, the next support stands at 0.6400, which should limit the downside.

Support levels: 0.6420 0.6400 0.6350 

Resistance levels: 0.6445 0.6470 0.6500

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