Australian Dollar, AUD/USD, Moving Averages – Technical Update:
- Australian Dollar on course for worst month since February
- AUD/USD trend remains bearish, but key support reinforced
- What are key levels to watch in the coming 24 – 48 hours?
At -4.5%, the Australian Dollar is on course for the worst month against the US Dollar since February. Furthermore, AUD/USD has declined for 5 consecutive weeks which was last seen in October 2022. A further 6th would mean the longest losing streak since February 2020. How is the technical landscape shaping up for the Australian Dollar in the near term?
On the daily setting, the exchange rate has dropped to the 78.6% Fibonacci retracement level of 0.6382 looking at the chart below. Since then, prices have been struggling to break lower, establishing and reinforcing support.
Meanwhile, a bearish Death Cross between the 20- and 50-day Moving Averages remains in play. In the event of a turn higher, these lines may hold as key resistance, maintaining the near-term downside focus. Extending losses places the focus on the November low of 0.6272 before the 2022 bottom of 0.6170 comes into focus.
Zooming in on the 4-hour chart offers a clearer picture of how the short-term technical landscape is shaping up. Using the chart below, we can see that near-term rising support from August 17th has been helping stabilize the Australian Dollar. This is as the 50- and 100-period Moving Averages are slowly coming closer into focus.
Immediate resistance is a combination of the 100% Fibonacci extension level of 0.6466 as well as the 50-period line. Clearing higher places the focus on the 78.6% point at 0.6525 as well as the 100-period MA. The latter might reinstate the downward technical bias. Falling under the 138.2% point at 0.6362 on the other hand opens the door to extending lower towards the November low.
--- Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
