Australia’s GDP for the 4th quarter of 2020 is scheduled for release in a few hours. The market expectation is for the Australian economy to have grown 2.3% (quarter-on-quarter), reflecting a bit of recovery from the 2nd wave of the coronavirus pandemic. However, the previous quarter showed a 3.3% expansion.
The AUD/USD heads into this report with a hawkish tone from the RBA, which enabled the pair to recover from damaging losses that were sustained from the biggest decline of Chinese investment in Australia in 6 years. This rebound occurred off the 0.7700 psychological support and needs to close above the 0.7800 resistance with a 3% penetration for the price to achieve a sustained push towards 0.78911. This move has to come off the back of a rise in the GDP figure above 3.0% and would also rely on bearish outcomes of the data on the US side of things to be actualized.
On the flip side, anything short of the market expectation could be bearish for the pair. The 4-hour chart shows a bearish flag which is still in consolidation. A drop below 0.7800 could trigger additional selling, targeting 0.7700 in the first instance and 0.76555 as a subsequent downside target. 0.75859 and 0.75141 form additional targets to the south.