Home AUD/USD Price Plunges to 0.72 Despite Upbeat PMI Data
AUD/USD Daily Outlooks

AUD/USD Price Plunges to 0.72 Despite Upbeat PMI Data

  • In response to Powell’s renomination, the Australian dollar plunges against the USD.
  • Australia’s PMI data for November could not trigger recovery.
  • A bounce in oil prices precedes a rise to September levels as traders eye inventory.
  • As technical weakness persists, the AUD/USD may approach the YTD lows. 

The AUD/USD price analysis shows a strongly bearish scenario for various fundamental reasons, while the technical picture tells the same story.

Are you interested to learn more about forex signals? Check our detailed guide-

The Australian dollar fell in overnight trading against the US dollar following the re-appointment of Fed chairman Jerome H. Powell by President Biden. In recent weeks, bets on underdog Lael Brainard rose as a result of Biden’s decision. Some advocates for progress were disappointed when Ms. Brainard was promoted to Vice-Chair. Rate hike bets soared on the news.

AUD/USD might see some upside after Markit Economics reported gains in the Australian services sector on the purchasing managers’ index. Despite the massive lockdowns, the November service PMI reached 55.0 instead of 51.8. The November rate was the highest since June before the massive lockdowns went into effect. In addition, the country’s production activity jumped from 58.2 to 58.5. The increase in vaccination rates is a good sign for the Australian economy.

The markets were pleased with the Fed’s continuity during most of the day. However, as of the close of trading, prices had fallen sharply, with the high-tech Nasdaq 100 index (NDX) closing 1.16% lower. In addition, Biden’s announcement triggered a heavy sell-off of government bonds. As bond yields rise when prices fall, interest rate-sensitive technology stocks have likely been impacted. However, Dow Jones managed to gain 0.5% that day.

It was not risk aversion that initially weakened the AUD/USD pair but rather the strength of the US dollar as the market abandoned its reluctant bets on Brainard’s slim chances to lead the Fed. DXY, the general dollar index for the year, reached a new high, darkening to 96.5. The Australian dollar performed well outside the dollar, appreciating against the safe-haven Japanese yen and Swiss franc.

After the commodity came under buying pressure the previous day, crude oil prices recovered from their six-week lows. Chinese traders evaluate potential releases from government reserves, while other US news organizations coordinate their releases. The American Petroleum Institute (API) and Energy Information Administration (EIA) will release weekly inventory data in 48 hours.

Are you interested to learn more about automated forex trading? Check our detailed guide-

AUD/USD price technical analysis: Bearish dominance under 20-SMA

aud/usd price analysis

The AUD/USD price failed to find acceptance above the 20-period SMA on the 4-hour chart. The rejection bar posted a very high volume. Meanwhile, the average daily range is 41% so far. It indicates that the pair is already on the way to hitting fresh monthly lows. The pair is expected to test the YTD lows around the 0.7100 mark. On the upside, 0.7250 will be the immediate resistance ahead of 0.7300.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

 

Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.