Shorting AUD/USD After the Rejection at the 50 SMA

The bullish retrace from last week has ended in AUD/USD and the 50 SMA rejected the price, so we decided to open a sell forex signal here

Skerdian Meta•Monday, March 6, 2023•2 min read

AUD/USD turning bearish again after failing at the 50 SMA

Today we are seeing a retreat in the USD, so the trend from Friday continues, with lower bond yields still present today. Equities opened strong, with the French CAC 40 index reaching a new record high of 7,400 before the gains eased off. However, the overall sentiment is now more cautious as we approach US trading.

Despite the lower yields, the dollar remained mostly unaffected and actually strengthened against the Chinese yuan during Asian trading. This was due to China’s announcement of a lower-than-anticipated GDP target for the year, set at 5%.

The US dollar saw more significant gains against the Australian and New Zealand dollars, with both currencies acting as substitutes for the Chinese yuan. The AUD/USD gradually decreased from 0.6735 to 0.6720 during the session, while the NZD/USD dropped from 0.6190 to 0.6175, both currently down by 0.7%.

Late last week we saw a retrace in AUD/USD ahead of the weekend, which took the price to 0.6770s. But, that’s where the 50 SMA (yellow) was standing on the H4 chart, which provided resistance and rejected the price. Today the price slipped lower as this pair starts to resume the bearish trend from last month. We decided to open a sell forex signal as the pressure has turned to the downside, despite some light USD weakness today, which is a bearish signal for this pair.

Later today FED chairman Jerome Powell is expected to hold his semi-annual Humphrey Hawkins which will continue tomorrow as well, starting with the Senate. Usually, the text of his comments is released the evening before the appearance. This would likely happen today, sometime after the equity market US market close. So, we might see some major fluctuations in the USD, which might send this forex pair in either direction, but the likelihood is that the comments will be on the hawkish side, which will send AUD/USD lower.

AUD/USD Live Chart

AUD/USD

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.