AUD/USD Daily Forecast – Test Of Support At 0.7000

AUD/USD Video 02.11.20.

Australian Dollar Is Losing Ground At The Beginning Of The Week

AUD/USD is testing the support at 0.7000 while the U.S. dollar continues to gain ground against a broad basket of currencies.

The U.S. Dollar Index is moving towards the nearest resistance level at 94.20 due to increased demand for safe haven assets before the U.S. presidential election. The new lockdowns in Europe have also put pressure on GBP/USD and EUR/USD, providing support to the U.S. Dollar Index. If the U.S. Dollar Index moves above 94.20, it will head towards 94.50 which will be bearish for AUD/USD.

Today, Australia reported that Manufacturing PMI decreased from 55.4 in September to 54.2 in October, in line with the analyst forecast. Meanwhile, Building Permits increased by 15.4% month-over-month in September compared to analyst consensus which called for growth of just 1.3%.

Tomorrow, the Reserve Bank of Australia will announce its Interest Rate Decision. Analysts expect that the Bank will lower the interest rate from 0.25% to 0.1%. Traders will also pay attention to the Bank’s commentary.

In the U.S., traders will focus on the upcoming Manufacturing PMI report which is expected to show that Manufacturing PMI increased from 53.2 in September to 53.3 in October. Tomorrow, the market will focus on the main event of the week – the U.S. presidential election.

Technical Analysis

AUD/USD has settled below the support at 0.7030 and is testing the next support level at 0.7000. If AUD/USD manages to settle below this level, it will head towards the next support at 0.6975.

Despite the strength of the recent downside move, RSI remains in the moderate territory so there is plenty of room to gain additional downside momentum in case the right catalysts emerge. A move below the support level at 0.6975 will open the way to the test of the next support at 0.6925.

On the upside, the previous support level at 0.7030 will likely serve as the first resistance level for AUD/USD. If AUD/USD gets above this level, it will head towards the next resistance at 0.7075. A move above 0.7075 will push AUD/USD towards the 20 EMA at 0.7090.

For a look at all of today’s economic events, check out our economic calendar.