Yahoo Finance AUD/USD Forex Technical Analysis – Aussie Hits 2-Year Low Amid Rising Risk Aversion
The Australian Dollar plunged against its U.S. counterpart on Friday, amid rising risk aversion as aggressive rate hikes from the Federal Reserve to curb inflation intensified recession fears.
In domestic news, the manufacturing sector in Australia continued to expand in June, the latest survey from S&P Global showed, with a manufacturing PMI score of 56.2. That was up from 55.7 in May and it moved further above the breakeven line of 50 that separates expansion from contraction.
On Friday, the AUD/USD settled at .6817, down 0.0088 or -1.29%. The Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $67.49, down $0.83 or -1.21%.
In the U.S., the Institute for Supply Management released a report on Friday showing its reading on U.S. manufacturing activity fell to its lowest level in two years in the month of June.
The ISM said its manufacturing PMI slid to 53.0 in June from 56.1 in May, although a reading above 50 still indicates growth in the sector. Economists had expected the index to dip to 54.9.
Short-Term Outlook
Trader reaction to .6817 is likely to determine the direction of the AUD/USD early Monday.
Bearish Scenario
A sustained move under .6817 will indicate the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into Friday’s low at .6764.
On Friday, the AUD/USD took out a pair of main bottoms from June 2020 at .6811 and .6777. The daily chart indicates there is plenty of room to the downside. The next major target is the May 15, 2020 main bottom at .6402.
Bullish Scenario
A sustained move over .6817 will signal the presence of buyers. The first upside target is a minor pivot at .6864. Since the main trend is down, sellers could come in on the first test of this level.
Overtaking .6864 will indicate the short-covering is getting stronger. This could trigger a surge into another minor retracement zone at .6917 – .6953.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
