AUDUSD Forex Forecast – Bears Gaining Traction?

AUDUSD Forex Forecast - Bears Gaining Traction?AUDUSD has been trending lower on its 1-hour time frame, moving inside a descending channel formation. Price is trading around the middle, though, still deciding whether to test the resistance at .7625 or support at .7550.
The 100 SMA is below the 200 SMA so the path of least resistance is to the downside and the selloff is likely to carry on. In addition, the 200 SMA lines up with the top of the channel, adding to its strength as resistance. The gap between the moving averages seems to be widening as well so bearish pressure is strengthening.
Stochastic is heading south so AUDUSD could follow suit. However, once the oscillator reaches the oversold area and turns higher, buyers could try to prop the pair back up.
Economic data from Australia came in weaker than expected yesterday, as construction work done sank 3.7% in the second quarter of the year versus the estimated 1.9% slide. On top of that, gold prices have been weaker, weighing on the correlated Aussie as well.
As for the US dollar, data from the US economy has also been weaker than expected but this seems to be supporting the safe-haven currency. Apart from that, expectations of hawkish remarks from Fed head Yellen in her Jackson Hole testimony are also allowing the dollar to stay afloat.
In terms of economic data, the US preliminary GDP reading is up for release on Friday and a small downgrade from 1.2% to 1.1% is eyed. Also due then is the revised UoM consumer sentiment index, which could be upgraded from 90.4 to 90.6. US durable goods orders, flash services PMI, and initial jobless claims are lined up today.
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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.