AUDUSD Forex Forecast – Large Correction to .7600?

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AUDUSD Forex Forecast - Large Correction to .7600?

AUDUSD Forex Forecast - Large Correction to .7600?AUDUSD bounced off its recent lows as risk appetite returned to the markets in the past few trading sessions. The pair looks ready to retrace to the broken support at the .7600 major psychological level, which lines up with the 50% Fibonacci retracement level and the 100 SMA.

At the same time, the 100 SMA is below the 200 SMA, confirming that the downtrend is likely to carry on. Stochastic is moving up, which means that there’s a bit of buying pressure left to trigger a correction to the .7600 area. RSI is also climbing, adding confirmation that a correction is taking place.

If the .7600 area holds as resistance, AUDUSD could resume its drop to the recent lows around .7400 and even create new ones, depending on how strong selling pressure gets. A break above the 61.8% Fib, on the other hand, could mean that a reversal from the downtrend is taking place.

AUDUSD Fundamental Factors

Chinese equities chalked up another day in gains, suggesting that the government’s stimulus measures are starting to take effect. This allowed risk appetite to boost the higher-yielding Australian dollar against the safe-haven U.S. dollar. Aside from that, news that the Greek government is ready to give in to some of its creditors’ requirements is also lowering the odds of a Grexit and keeping risk-off moves at bay.

However, the path of least resistance for AUDUSD might still remain to the downside, as the selloff in Chinese equities probably resulted to a slump in consumer spending and confidence. This also probably weighed on business investment and production, which could mean a downturn in demand for Australia’s raw material commodity exports.

Note, however, that Australia recently printed a stronger-than-expected jobs figure and that the FOMC statement turned out to be a disappointment when it comes to confirming that the Fed can hike rates in September.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.