AUD/USD demoralized by bearish iron ore forecasts, trendline hurdle intact
- Goldman Sachs sees iron falling to $50 levels in one year.
- The descending trendline continues to put brakes on AUD's ascent.
The forward motion in the AUD/USD pair ran out of steam at a session high of 0.7608 possibly due to Goldman Sach's bearish iron ore price forecasts.
The investment bank expects the iron ore prices to fall back to $50 levels in one year. This is bad news for the AUD as iron ore is one of Australia's top exports. Further, gold is having a hard time scaling the $1300 mark as well. So, AUD/USD has turned red and was last seen trading at 0.7587 levels.
Also, technicals are doing their bit in keeping the Aussie gains under check. The trendline sloping downwards from the Sept. 20 high and Oct. 20 high has capped AUD's ascent for last four trading days. The story is no different today.
Quite clearly, the AUD is on the back foot and may suffer more losses if the US GDP (due later today) is revised higher.
AUD/USD Technical Levels
Jim Langlands from FX Charts writes, "on the topside, the initial resistance will arrive at 0.7620 and again at 0.7640/50. Despite the bearish key reversal seen yesterday, the daily charts still look positive and a test of the H/S neckline formation at 0.7660 could still be on the cards at some stage, which ties in with the 13 Nov high of 0.7665 and some minor Fibo resistance. Beyond this would then allow a run towards 0.7675/80 and possibly 0.7695/0.7700."
"I would be a little wary on the topside, and if we break below 0.7590/85 we could quickly head down to 0.7565 and 0.7550 ahead of the stronger 0.7530/35, area, which will continue to be strong, but below which would target Fibo support at around 0.7515. A break of this would then look towards 0.7485 and 0.7460/70 (Rising trend support) albeit this is some way off."