AUD/USD Forecast: Could the recovery continue?

AUD/USD Current Price: 0.6756

• Australian NAB’s Business Confidence unexpectedly shank to 1 in June.
• A temporal pause in risk aversion weighed on the greenback ahead of US inflation data.
• AUD/USD has corrected oversold conditions and may recover further once above 0.6790.

The AUD/USD pair heads into the Asian session, trading near a daily high of 0.6778, recovering from an early low of 0.6710. The greenback has been consistently rising on the back of markets’ concerns about economic progress. Slowing growth coupled with record inflation levels spooked investors away from high-yielding assets, while central banks’ decisions to tighten their monetary policies added to the mixture.

Financial markets’ turmoil paused on Tuesday as the US government cooled down speculation of a recession in the country. However, fresh data to be out on Wednesday will give clearer clues than a White House memo. The country will publish the June Consumer Price Index, foreseen at 8.8% YoY, up from the previous 8.6%.

Meanwhile, Australia published June NAB’s Business Confidence, which sunk to 1 from 8 in the previous month, missing an expected improvement to 8. NAB’s Business Confidence in the same period printed at 13, better than the 9 expected but below the previous 15. The country will publish July Westpac Consumer Confidence on Wednesday, previously at -4.5%.

AUD/USD short-term technical outlook

The AUD/USD pair is trading in the lower end of its latest range, still bearish but hinting at a possible bullish correction, without confirming it. Technical indicators in the daily chart are recovering from near oversold readings but are still well into negative territory. At the same time, moving averages maintain their bearish slopes far above the current level.

In the near term, and according to the 4-hour chart, the chances of further recoveries cooled down. Technical indicators have bounced from near oversold levels but lost their upward strength and turned flat below their midlines. A bearish 20 SMA provides immediate resistance at around 0.6790, maintaining its bearish slope below the longer ones.

Support levels 0.6710 0.6670 0.6625

Resistance levels: 0.6790 0.6840 0.6885

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