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AUD/USD: Will the Bearish Trend Continue Amid Weak Global Economic Data?
Forex
Summary:
After a slight gain in the early session, the AUD has been under pressure as the USD has recovered, supported by better-than-expected US economic data. Meanwhile, internal factors from the Australian economy continue to put downward pressure on the AUD, making the bearish trend likely to continue...
Sell
EXPIREDAUDUSD
EXP
0.65021
Entry Price
0.64700
TP
0.65150
SL
0.65229 +0.00180 +0.28%
--
Point
EXPIRED
0.64700
TP
0.65146
CLOSING
0.65021
Entry Price
0.65150
SL
AUD/USD had a volatile trading day. Prices opened at 0.64638 and quickly rose to a high of 0.65055 in the morning session, supported by positive sentiment in commodity markets. However, the rally was short-lived. The AUD came under pressure as a report from the US showed retail sales rose sharply by 0.7% last month, far exceeding the forecast of 0.3%. The USD quickly recovered, becoming the strongest currency in the basket by the end of the session.
Meanwhile, from Australia, poor economic data continued to extend the downward trend. The latest report from the Reserve Bank of Australia (RBA) showed a decline in business confidence and consumer spending, reflecting concerns about the country's potential economic slowdown. The country's heavy dependence on iron ore and energy exports also added to the pressure, especially as China - Australia's main trading partner - faces the risk of a deeper recession.
Market psychology
The current market sentiment reflects investor caution. For the AUD, concerns about economic stagnation and uncertainty in the commodity markets are reducing the attractiveness of the currency. In particular, capital flows have been rapidly shifting away from the AUD as the USD has been supported by better-than-expected economic reports.
Markets are also focused on the RBA’s policy expectations. With core inflation falling below the 4% target, the RBA’s ability to raise interest rates further in the coming months has been limited. This has weakened the AUD against the USD, which is currently benefiting from the prospect of higher interest rates from the US Federal Reserve (Fed).
Technical analysis
On the M15 chart, AUD/USD shows a clear bearish trend after failing to overcome the strong resistance at 0.65055. Technical signals also support this view:
Stochastic indicator (5,3,3): Currently at 19.26, the pair is entering the oversold zone, but the bearish momentum is still dominant. The %K line crosses below the %D line, confirming a short-term sell signal.
Bollinger Bands: Price is trading near the lower band of the Bollinger Bands at 0.64800, indicating increased selling pressure. If price breaks this lower band, the possibility of a deeper decline is very high.
Ichimoku Kinko Hyo: The price has broken below the Tenkan-Sen and Kijun-Sen lines, signaling strong bearish momentum. Meanwhile, the upper Kumo cloud is acting as a key resistance zone, preventing any recovery attempts.
Resistance and support: The nearest resistance level is identified at 0.65100, while the important support level is located at 0.64700. A break below this support level could push the price further down, with the next target being 0.64550.
Trading Recommendations
Based on fundamental and technical signals, a SELL trading strategy for AUD/USD is proposed:
Entry: SELL at 0.65021 when price remains below 0.65050, confirming downtrend.
Take Profit: Set the take profit target at 0.64700, corresponding to the nearest support zone.
Stop Loss: Place stop loss at 0.65150 to protect capital in case price reverses to the upside.
Risk Warnings and Investment Disclaimers
You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.
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