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AUD/USD Price Forecast: Rejection near 100-day SMA supports prospects for deeper losses

By TradeRadius | Fri, 08 Nov 2024 09:36:27 UTC

AUD/USD meets with a fresh supply on Friday amid the emergence of some USD dip-buying.
The overnight failure near the 100-day SMA and the technical setup favors bearish traders.
A sustained strength and acceptance above the 0.6700 mark will negate the negative bias.

The AUD/USD pair fails to capitalize on the previous day's strong move-up to the 0.6700 neighborhood, or a two-week top and retreats from the vicinity of the 100-day Simple Moving Average (SMA) resistance. Spot prices extend the intraday descent through the first half of the European session on Friday and drop to the 0.6625-0.6620 region, or a fresh daily low amid a modest US Dollar (USD) strength.

Expectations that Trump's policies will spur economic growth, boost inflation and restrict the Federal Reserve's (Fed) ability to interest cut rates aggressively help the USD to stall the previous day's retracement slide from a four-month top. This turns out to be a key factor exerting downward pressure on the AUD/USD pair. The AUD/USD bulls, meanwhile, seem unaffected by the fact that China's Standing Committee of the National People's Congress (NPC) approved plans to increase the local debt ceiling. Even the Reserve Bank of Australia's (RBA) hawkish stance earlier this week fails to lend support to the Aussie.

From a technical perspective, acceptance below the very important 200-day SMA will suggest that a short-covering rally from the lowest level since August 8 touched on Wednesday has run out of steam. Given that oscillators on the daily chart – though have been recovering – are still holding in negative territory, the subsequent fall could drag the AUD/USD pair to the 0.6600 mark en route to the 0.6555-0.6550 support zone. The downward trajectory could extend further towards the 0.6515-0.6510 area, or the multi-month low before spot prices eventually drop to the next relevant support near the 0.6465-0.6460 region.

On the flip side, bulls need to wait for a sustained breakout above the 100-day SMA hurdle, currently pegged just ahead of the 0.6700 mark, before placing fresh bets. This is closely followed by the 50-day SMA, around the 0.6715-0.6820 area, above which the AUD/USD pair could climb beyond the 0.6750-0.6755 intermediate resistance and aim to reclaim the 0.6800 round figure. The subsequent move-up will suggest that the recent downfall has run its course and shift the near-term bias in favor of bullish traders.

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