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The Australian Dollar is Actively Losing Ground

10/11/2022 11:00 AM

The Australian dollar is noticeably declining, testing the level of 0.6250 for a breakdown. The last time the AUD/USD pair traded at current levels was in April 2020. The pressure on the position of the Australian dollar is exerted by the alarming situation in world markets, which is aggravated against the backdrop of the development of the energy crisis and the ongoing geopolitical tensions in Eastern Europe.

However, quotes are under pressure from macroeconomic statistics from Australia. On Monday, investors drew attention to the fall in the index of activity in the Australian Services sector from the Australian Industry Group (AIG): in September, the indicator fell from 53.3 points to 48.0 points, which turned out to be worse than the average forecasts of analysts who did not expect a fall of the indicator below the psychological barrier of 50.0 points. Today's Consumer Confidence data from Westpac Banking Corp. reflected a 0.9% decline in the index in October after rising 3.9% the previous month. Similar results were demonstrated by the index of Confidence in the business environment from the National Bank of Australia, which in September corrected from 10.0 points to 5.0 points. At the same time, National Australia Bank's Business Conditions index for the same period increased from 20.0 points to 25.0 points, while experts expected it to decline to 18.0 points.

According to the statistics of the Reserve Bank of Australia (RBA), high interest rates have a negative impact on the ability of households to repay loans. At the moment, there is only a small group of borrowers who cannot meet their debt obligations, but, according to members of the RBA, this could increase markedly in the near future if economic conditions, especially unemployment, worsen. Despite a strong labor market, income growth has not kept pace with inflation in Australia.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is expanding, but at the moment it is not keeping up with the surge of "bearish" sentiment. MACD is going down, keeping a fairly stable sell signal (located below the signal line). Stochastic retains downward direction but is located in close proximity to its lows, which indicates the risks of oversold AUD in the ultra-short term.

Resistance levels: 0.6320, 0.6362, 0.6450, 0.6522. | Support levels: 0.6250, 0.6200, 0.6140, 0.6100.

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