The Aussie continues losing ground to the USD; the pair is on a three-day losing streak, and it reached a level we had not seen since May 2020. AUDUSD is down 6.75% in the last eleven trading sessions; we could see the pair sink lower with the release of a high-impact economic indicator from AU later in the day.
Australia will announce the Retail Sales MoM for August in the early stage of the new trading session; we expect a drop from the previous figure of 1.3% in July; experts anticipate a 0.4% for August. The decline in retail sales suggests that the economic activity in AU is falling, which will hurt the Australian dollar exchange rate against other currencies, particularly the US dollar.
The US dollar continues strengthening across most major forex pairs while the S&P 500 fell to a two-year low as investors fear a global recession. The US economic activity is likely to slow down after the Fed hiked the rates; however, it could take some time before we start seeing a significant reduction in inflationary pressures in the US.
The US released a number of economic indicators earlier in the session with a mix of good and bad results; Durable Goods Orders ex Defense MoM came out at -0.9%, while experts anticipated a 0.3%. New Home Sales MoM shocked us with a 28.8% result when analysts expected a -0.5%. Fed chair Jerome Powell expects this figure to drop significantly in the upcoming months after the Fed hiked interest rates 75 basis points to a total of 3.25%.
The trend continues to be downwards since the short and medium-term moving averages are above the current price, and the gap between the trend lines continues to expand. The pair could find it hard to break the support at $0.6414.
The relative strength index is at 25%; inside the oversold area, we could see a pullback in the upcoming days as the market sentiment can change in the following sessions; however, our parabolic S A R indicator suggests that the price will continue falling in the short term.
The Bollinger bands are wide, allowing high volatility to continue in short to medium term; the pair is trading below the lower band, suggesting that the price is relatively low.
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