AUD/USD struggles to hold above 0.6600 as risk aversion dominates

Indian Rupee
  • Opening at 0.6679, the AUD/USD crosses to an intraday low of 0.6601 before closing at 0.6606.
  • Investor risk aversion is increased by serious worries related to Credit Suisse’s problems.
  • The employment change and rate figures for Australia are eagerly anticipated by traders.

On Wednesday, the AUD/USD currency pair is under selling pressure as risk-averse investors become more worried about recent disastrous developments involving Credit Suisse, just after Silicon Valley Bank collapsed (SVB).

Australian dollar makes an intraday low of 0.6601 before ending the day at 0.6606, down 1.09% as of the time of the press on Wednesday.

The situation at Credit Suisse and forecasts for a 25-basis-point (bps) increase by the Federal Reserve (Fed) in March are still pushing up the value of the US dollar.

The US Dollar has not been negatively impacted by the recent poor macroeconomic figures from the US, which include a 0.1% decline in the February Producer Price Index (PPI) and a lower-than-anticipated core PPI rate.

Also, the US retail sales decline by 0.4% in February, which is less than the 3.2% gain in January and the 0.3% decline that was expected. Meanwhile, the Empire State Manufacturing Index published by the New York Fed plunges drastically to -24.6, falling short of expectations for a decline to -8 from the previous -5.8.

Demand for safe haven assets, however, continues to support the US Dollar as a result of worries about a wider financial catastrophe. Also, the AUD/USD pair is anticipated to move lower as a result of the Reserve Bank of Australia’s (RBA) dovish tilt, which suggests that it may be reaching the end of its rate-hiking cycle.

Important economic events: The most important data for Thursday will be Australia’s Employment Change s.a. (Feb) and Unemployment Rate s.a. (Feb), which will be announced at 00:30 GMT.

Traders will also pay particular attention to the US Initial Employment Claims data, which will be released on Thursday at 12:30 GMT.

Technical Analysis: The AUD/USD pair continues to be in a decline from a technical standpoint, with the daily 20-SMA at 0.6747 serving as a strong resistance mark.

A significant trendline connecting the tops of the falling price trend from the beginning of February and today’s high occurred simultaneously. The intraday decrease that followed the trendline retest raises the possibility that the bear trend’s next downward movement is already taking place. The next objective on the downside is 0.6565, or the lows from March 10. At 0.6580, there is another important support level.

Indicating a bearish tendency, the daily 50-SMA at 0.6881 adds to the downward pressure. The daily RSI(14) is currently at 36.970, indicating that the pair is approaching oversold territory and that there is a higher chance that the price of AUD/USD may stabilise before going down further.

The 38.2% Fibonacci level at 0.6671, the daily pivot point at 0.6670, the pair’s intraday high of 0.6712, and the resistance levels at 0.6709, 0.6735, and 0.6773 serve as the immediate resistance levels.