AUD/USD Forecast: Pointing to 0.6800 as the US Dollar remains weak

AUD/USD Current Price: 0.6765

• The US Dollar continues to face pressure as Santa’s rally persists.
• The AUD/USD attained new monthly highs but experienced a loss of momentum.
• The next target is at the 0.6800 area, while the immediate key support is at 0.6730.

The AUD/USD reached its peak on Wednesday at 0.6778, marking the highest intraday level in almost five months, before experiencing a modest pullback. The pair is maintaining its recent gains supported by a positive risk appetite and a weaker US Dollar.

The Greenback continues to be affected by market participants reassessing positions after last week’s FOMC meeting. Economic data from the US released on Wednesday showed the CB Consumer Confidence rising to a five-month high in December at 110.7. Additionally, Existing Home Sales rebounded from a five-month decline, reaching an annual rate of 3.82 million, surpassing the market consensus of 3.77 million.

However, these economic figures did not aid the Dollar’s performance. On Thursday, market participants will closely scrutinize the Jobless Claims data and the Philly Fed. Also scheduled is a new estimate of Q3 GDP (old news). On Friday, the Federal Reserve’s preferred gauge of inflation, the Core Personal Consumption Expenditure (Core PCE), is due.

Incoming information could potentially help the US Dollar in recovering some of its recent losses or trigger further declines. The Australian Dollar, on the other hand, relies on the continuation of the positive risk sentiment to maintain its focus on the 0.6800 level.

AUD/USD short-term technical outlook

The AUD/USD is on its way to the highest daily close since late July. The daily chart shows the pair remains within an ascending channel. The upper limit of the formation should restrict the upside around 0.6810 if the pair surpasses 0.6800. A breakout above 0.6810 could trigger a bullish acceleration. On the downside, the lower boundary of the channel stands near 0.6600, closely aligned with the 20-day Simple Moving Average (SMA).

On the 4-hour chart, the bias is to the upside; however, technical indicators do not show enough conviction for the Aussie to reach fresh highs. Technical indicators, including the Relative Strength Index (RSI) and Momentum have turned south. This favors a consolidation with a slight inclination towards the downside ahead of the Asian session. A crucial support level in the short term is at 0.6730, represented by the 20-SMA and a horizontal level. Below that level, the correction could extend to 0.6700. Above 0.6780, the Aussie would recover momentum. 

Support levels: 0.6730 0.6690 0.6660

Resistance levels: 0.6780 0.6810 0.6835