AUD/USD Traders Kick Off the Week as New China Lockdowns Weigh Against Econ

Despite the stronger US dollar, AUD/USD continues to defy the strength of the greenback as commodity prices remain stable. The relatively quiet Ukraine news ticker and lower risk aversion sentiment are also helping to dampen risk aversion. Both currencies are consolidating near their highs as the 50-day Simple Transferring Common attempts to cross above the 200-day SMA and form a Golden Cross. The Golden Cross is a bullish sign and if the 50-day SMA can stay above the 200-day SMA, then the Australian greenback is likely to continue its advance.

A forecast poll by 33 analysts indicates that the AUD/USD is a buy on a breakeven scenario with a one-month rate target of 0.7352. However, there is a high risk of loss and the analyst’s consensus view may not be dependable. Besides, the market is not yet fully priced for the potential downside risks. Before investing, conduct your own research and make sure you understand your position.

A broader view suggests that the AUD/USD will remain under pressure in the short term. The Reserve Bank of Australia expects to keep purchasing bonds at a $5bn per week until 2022. Citibank also believes that the AUD’s upside potential will be limited by the underlying growth story in China. Consequently, Citibank forecasts the AUD/USD exchange rate for the end of 2020 to be 0.75, with a forecast of 0.78 by year’s end.

While a broad range of indicators is still present in the AUD/USD trading space, AUD/USD is trading slightly lower in early Asia. Its highest level since October 2021 has been reached in APAC hours, and it may test the high to see if the trend continues. Although momentum oscillators point to a waning of momentum, technical analysis shows the currency pair’s price action. In addition, the 50-day SMA is aiming for a cross above the 200-day SMA and a Golden Cross could reignite buying in the currency pair.

As the economic data and asymmetrical threats to global trade have made the AUD/USD a prime target for a long-term rally, the AUD/USD is currently trading near its highest level since October 2021. On the technical charts, the AUD/USD is trading at its highest level since October 2021. If prices continue to fall, it is likely that the prevailing trend will push them up to test the October high. The 78.6% Fibonacci retracement level may be in play. In addition, the 50-day SMA is aiming to cross above the 200-day SMA, generating a high profile Golden Cross. The resulting breakout may reignite buying in the AUD/USD.

As a result of the new China lockdowns, AUD/USD is poised to move higher on Monday, and the risk of lower AUD/USD is increasing. The risks are exacerbated by the spread of COVID-19, which has disrupted the Australian economy. Nevertheless, a few fundamental factors are keeping the AUD/USD from falling further, despite the latest data from the two countries

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