Technical Analysis

AUD/USD Price Analysis – March 03, 2023

By LonghornFX Technical Analysis
Mar 3, 20233 min

Daily Price Outlook

The AUD/USD pair is trading at $0.6743, representing an increase of 0.21% in the past 24 hours. Traders are closely analyzing the comments made by Federal Reserve officials while also waiting for China's upcoming legislative meeting to gauge the level of economic support that could be expected. Despite these factors, the Australian dollar has remained steady.

Chinese Economy and Its Impact on AUD/USD

The Chinese economy is making significant progress toward economic recovery after lifting Covid restrictions. The government and the People's Bank of China (PBoC) are committed to boosting domestic demand by implementing further stimulus and reform initiatives.

In addition, according to a report by S&P Global released on Friday, China's services sector experienced growth in February due to increasing demand. The report indicates that the Caixin Services PMI rose from 52.9 in January to 55.0 in February, showing a consecutive month-over-month improvement in activity.

It is worth noting that Australia is China's top trading partner, and an increase in China's service PMI benefits the Australian Dollar.

All eyes are now on China's annual parliamentary session, which is set to take place on Sunday. Beijing will announce new policy measures to support economic growth and targets.

RBA's Interest Rate Guidance

Despite a recent decline in Australia's Consumer Price Index (CPI), the Reserve Bank of Australia (RBA) remains steadfast in its hawkish outlook. RBA policymakers have not indicated that Australian inflation has peaked so the central bank will maintain a hawkish position.

A recent Reuters survey on the RBA's interest rate guidance reveals that the central bank is expected to increase its interest rate by 25 basis points (bps) to 3.60% on Tuesday, March 7.

The survey predicts that the RBA will increase its interest rate again in Q2 before pausing until next year, resulting in a higher peak rate than anticipated. Further rate hikes may support the Australian Dollar (AUD).

Dollar Under Pressure

On Thursday, Raphael Bostic, the president of the Atlanta Federal Bank, suggested that the current tightening cycle by the Federal Reserve could end by mid-summer. While he supports a 25 basis point rate hike in March, he is open to reconsidering a more hawkish outlook if inflation and labor market figures show improvement.

Bostic's comments have pressured the US Dollar Index (DXY), currently trading at 104.89. Later today, the US Institute of Supply Management (ISM) will release data on the Services PMI (Feb), potentially supporting the US Dollar.


AUD/USD Intraday Technical Levels

Support      Resistance

0.6700         0.6762

0.6672         0.6796

0.6639         0.6824

Pivot Point: 0.6734

AUD/USD – Technical Outlook

Yesterday, the AUDUSD pair traded negatively and approached the 0.6700 level. There is some bullish bias in the market due to stochastic positivity. The following support level is at 0.6665, and the pair must remain below 0.6780 to continue the projected downtrend.

The EMA50 is still supporting the bearish wave within the negative channel. Today, the trading range is expected to be between the support level of 0.6670 and the resistance level of 0.6780.



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