- Consumer spending rose less than expected in May, showing slow economic growth.
- Investors ignored the drop in jobless claims, pointing to slight economic growth in the US.
- 6800 is the next target in the charts.
Today’s AUD/USD forecast is bearish. The risk-sensitive pair is under a lot of pressure as investors scramble for safety in the dollar and the yen. The AUD/USD dipped to a two-year low. Investors were disappointed as consumer spending rose less than expected in May. This data was a sign that the economic recovery in Q2 was losing steam.
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Initial jobless claims in the US came lower despite recent technological and housing layoffs. It points to slight growth in the US economy. There is, however, still a lot of fear that the Fed will tip the economy into a recession.
“The Fed hasn’t won the war on inflation just yet, but there are some somewhat encouraging signs that the economy is slowing down. Despite recession fears, job layoffs have not quite reached high enough levels to make the call that the economy is headed over the cliff into the depths of a recession,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
AUD/USD key events today
The Commodity Futures Trading Commission (CFTC) will release the Australian dollar’s Commitments of Traders (COT) report. This report breaks down net speculative positions in the US futures market. This data gives traders an insight into market sentiment.
In the United States, the Institute of Supply Management (ISM) will release the Manufacturing Purchasing Managers Index (PMI) report. Investors expect the report to show a drop from a previous 56.1 to 54.9.
AUD/USD technical forecast: Full steam ahead for bears
Looking at the 4-hour chart, the price broke below a critical support level at 0.68668 and is heading lower. The price is trading below the 30-SMA, showing that bears are in control. The RSI, which is trading below 50, also favors bearish momentum.
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At this point, the price might retest the recently broken support and find resistance. If bears can hold on to their momentum, we might see the price get to the 0.68001 support. AUD/USD last tested this price level as support on June 15, 2020. A break below this level could mean lower prices. The bearish trend will only change when the price breaks above the 30-SMA and the RSI trades above 50.
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