AUD/USD reverses sharply from monthly highs to fresh lows under 0.6740
- US Dollar soars across the board after US data.
- Aussie under pressure versus the Dollar ahead of the RBA.
- AUD/USD drops more than a hundred pips from monthly highs to the lowest since Wednesdays.
The AUD/USD dropped further after breaking under 0.6800 and recently it reach its lowest since Wednesday at 0.6740. The pair remains near the low, under pressure amid a stronger US Dollar across the board following US economic data.
Good US data bad news for Wall Street
Economic data from the US came in above expectations on Monday, helping the US Dollar. The S&P Global Composite PMI for November was revised from the 46.3 preliminary reading to 46.4. Factory Orders in October rose 1% surpassing expectations of a 0.7% increase. The ISM Service PMI in November rose from 54.4 to 56.5. The Price Paid Index fell from 70.7 to 70.
Following the latest reports, the US Dollar gained momentum across the board and hit fresh daily highs. Metals extended the decline and US stocks hit fresh lows.
RBA next
On Tuesday, the Reserve Bank of Australia (RBA) will announce its decision on monetary policy. The consensus is for a 25 basis points rate hike. The decision and the guidance offered in the statement will likely have a large impact on the Aussie.
“The Statement would read dovish if the Bank states it will assess the data over the holiday break to determine its next cash rate move. Alternatively, the Bank explicitly stating 300 bps of cumulative hikes would also be dovish (the RBA assumed 300 bps by Jul '23)”, explained analysts at TD Securites.
Short-term technical outlook
The AUD/USD has reversed sharply and the outlook has deteriorated significantly for the bulls. A recovery back above 0.6800 would shift the momentum back to the Aussie. Above the next resistance stands at 0.6820. If the pair holds above 0.6840, a new test of the recent high at 0.6850 seems likely.
On the flip side, a support area emerges around 0.6720. A break lower would put attention on 0.6700 with the next barrier seen at 0.6665.
Technical levels