As global markets absorbed the impact of the Fed’s grim outlook for the US economy this Thursday, the investment sentiment quickly switched to a flight to safety, which has placed the US Dollar back in demand and punished the commodity-backed currencies. Consequently, the AUDUSD’s near-term sentiment has turned bearish, sending the pair lower by 1.92% on the day.
There are no news releases out of Australia until next week Thursday when the employment data will be released. This gap gives traders sufficient opportunity to trade the pair using market sentiment and technical setups.
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Technical Outlook for AUDUSD
The AUDUSD hit its 2020 highs on 2 January after the US Dollar was sold relentlessly in May and early June. The change in market sentiment has allowed for a pullback, which has taken it towards the 0.68615 support level (lows of early January 2020). Coincidentally, the upper border of the ascending channel on the daily chart provides additional support at that area. A breakdown of that support takes the AUDUSD into the channel once more, where the 0.66742 support beckons. A breakdown of that area will most likely break down the channel, bringing 0.65408 and 0.63956 into focus. 0.62625 represents the double bottom of 15 April and 21 April as well as the 50% retracement of the swing low of 18 March to the swing high of last week and remains a valid downside target.
A bounce on the current support could allow for a retest of the 0.69160 price level, with 0.70595 and 0.72043 constituting resistance targets not seen since late 2018/early 2019.
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