(MENAFN- Daily Forex) Advertisement got a position to try? don't wait! trade aud/usd now Bearish view Sell the aud/usd pair and set a take-profit at 0.6585. Add a stop-loss at 0.6783. Timeline: 1-2 days.
Bullish view Set a buy-stop at 0.6715 and a take-profit at 0.6800. Add a stop-loss at 0.6615.
The AUD/USD price pulled back after the relatively weak Australian retail sales numbers and as China experienced Covid-zero protests. It dropped to 0.6680, which was a few pips below last week's high of 0.6783 as the US dollar rebounded.US dollar rises amid China tensions
The AUD/USD price retreated as investors focused on the ongoing protests in China. Residents in key cities like Beijing and Shanghai staged their biggest acts of civil disobedience in decades. They are protesting relentless lockdowns, quarantines, mass testing, and robust surveillance.
These lockdowns have led to a substantial slowdown of the Chinese economy. Economists expect that the economic growth will lag that of other Southeast Asian countries like Singapore and Vietnam. The central bank expects that the economy will expand by less than 3% this year.
China is an important country for Australia since it is the biggest buyer of its goods and services. China is also the biggest player in most commodities that Australia deals in like coal and iron ore. Therefore, while these commodities from Australia are banned in China, a slowdown in the country affects demand, which pushes prices lower.
The AUD/USD price also pulled back as the US dollar index (DXY) rallied because of these protests. The index rose by more than 40 basis points while the VIX soared by over 7%. American stocks declined, with the Dow Jones shedding over 300 points.
The pair also dropped after the relatively weak Australian retail sales numbers. Data by the statistics agency showed that sales dropped by 0.2% in October after rising by 0.6% in September as inflation remained elevated. Economists at ANZ expect that inflation will surge to 7.8% in October, the highest point in 32 years.
The next key data to watch will be the upcoming US consumer confidence data by the Conference Board. Economists expect that confidence dropped from 102.5 to 100.0.AUD/USD forecast
The AUD/USD pair staged a strong rally earlier this month. Recently, however, it has found a strong resistance level at 0.6783, where it formed a double-top pattern. This pattern is usually a bearish sign. It has moved slightly below the 25-day moving average while the Stochastic Oscillator moved below the oversold level.
Therefore, because of the double-top pattern, the pair will likely have a bearish breakout. If this happens, the next level to watch will be at 0.6586, its neckline.
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