Daily Price Outlook
AUD/USD is trading at 0.6605, dropping by 0.30% in 24 hours. The Australian dollar fell as data revealed that inflation in Australia was still declining but slower than anticipated. The mixed data increased doubt about the Reserve Bank's interest-rate plans ahead of next week's meeting.
Steady dollar & AUD/USD
According to numbers made public on Tuesday, US consumer confidence hit a nine-month low in April, increasing the probability that the economy will shrink this year. The Consumer Confidence Index dropped to 101.3 from March's reading of 104.0.
As data from manufacturing revealed further issues in the US economy, US economic indicators fell short of forecasts. Moreover, the risk-off sentiments caused the US dollar to decline. DXY has decreased by 0.30 percent to 101.56. The weak dollar prevented the AUD/USD from falling further.
Additionally, the central bank is anticipated to increase rates by 25 basis points the next week, following which markets are putting in a 68% possibility for a pause in June. However, the Fed has not made it clear that it plans to moderate its hawkish attitude, with recent calls for higher interest rates from multiple officials.
Looking ahead, the monthly US Durable Goods Orders report for March may give hints regarding ideas on terminal rates.
Australian Inflation Softens Further
According to the most recent economic data, Australia's inflation is declining ahead of the RBA decision on its interest rate. The quarterly rise in Australia's inflation rate was the lowest since the end of 2021 during the first three months of 2023.
CPI inflation increased at a quarterly rate of 1.4% in Q1, above estimates for an increase of 1.3%, although this was still the lowest rate since December 2021. However, annual inflation has slowed to 7.0%, slightly higher than expectations of 6.9% but lower than the last publication of 7.8%. The monthly CPI index also slowed, falling from the previous 6.8% release and the consensus estimate of 6.6% to 6.1%.
A considerable slowing of Australian inflation will support the Reserve Bank of Australia's (RBA) decision to keep interest rates at 3.60%, as indicated at the April monetary policy meeting. It might put pressure on the Australian dollar. Therefore, with the release of more softening inflation data by the Australian Bureau of Statistics, the AUD/USD pair started to fall.
Daily Technical Levels
Pivot Point: 0.6649
AUD/USD – Technical Outlook
The AUD/USD currency pair experienced a sharp decline following the release of worse-than-expected inflation figures from the Australian economy, which raised concerns about the country's economic growth. This led to investors short-selling the AUD/USD pair and entering a sell zone, causing it to fall. However, it has since found support at the 0.6595 level, with the bullish engulfing candle and tweezers bottom pattern visible on the four-hour time frame indicating a potential bullish rally.
If the AUD/USD pair manages to sustain above the 0.6636 level, which is a 38.2% Fibonacci retracement level, it could lead to a bullish breakout towards the next resistance level of 0.6663, extended by the 61.8% Fibonacci retracement. Technical indicators such as RSI and MACD suggest a bullish crossover, supporting long positions above the 0.6600 level, with initial targets at 0.6650 and secondary targets at 0.6680.
However, if the pair fails to sustain above the 0.6595 level and breaks below it, the currency has the potential to reach the immediate support level of 0.6560.
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