- US data revealed continued contraction in the manufacturing sector.
- Wall Street and risk-sensitive currencies such as the Australian dollar fell on Tuesday.
- Australia’s economy remained sluggish in the second quarter.
The AUD/USD forecast shows more downside potential as the greenback hovers near recent highs after an overnight rush of safe-haven inflows. However, it pulled back slightly on Wednesday, allowing the Aussie to bounce back despite poor data from Australia.
–Are you interested in learning more about day trading brokers? Check out our detailed guide-
The dollar retreated from recent highs as investors took profits after a rally in the previous session. On Tuesday, US data revealed continued contraction in the manufacturing sector, raising fears that the economy is heading into recession. The ISM manufacturing PMI came in at 47.2, below estimates of 47.5. Investors have become very sensitive to economic reports as the economy slows. Wall Street and risk-sensitive currencies such as the Australian dollar fell in particular. Meanwhile, currencies considered safe havens, such as the yen and dollar, have strengthened.
However, the move faded by Wednesday as the focus shifted to upcoming US non-farm payrolls. Slower-than-expected job growth and high unemployment could cause another round of market turmoil. Market participants are on high alert, looking for signs that the US economy is slowing too fast. Recession worries could hurt the Australian dollar and strengthen the US dollar.
Elsewhere, data from Australia on Wednesday revealed the economy remained sluggish in the second quarter. GDP was at 0.2%, staying at the same rate as in the previous quarter. Meanwhile, analysts had expected an increase of 0.3%. At the same time, the annual figure was reduced from 1.3% to 1.0%. High interest rates curb demand. As a result, investors estimate a 90% chance of an RBA rate cut in December.
AUD/USD key events today
AUD/USD Technical Forecast: Bears stand near 0.6700
On the technical side, the AUD/USD price has paused its decline at the key support level of 0.6700. It is well below the 30-SMA with the RSI in bearish territory, indicating a bearish bias. The previous bullish trend reversed after the RSI made a bearish divergence.
–Are you interested in learning more about automated trading? Check out our detailed guide-
The price recovered slightly after finding support at the 0.6700 level. Bulls could initiate a pullback to the 30-SMA before the downtrend resumes. However, if the bearish momentum remains strong, the price is likely to break the support to retest the 0.6600 level.
Do you want to trade Forex now? Invest in eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
