Daily Price Outlook
The AUD/USD pair is currently trading at 0.6637, down by 0.41% within the last 24 hours. The pair has trended lower due to the USD's increased value in anticipation of the US CPI.
Westpac Consumer Sentiment
A private survey released on Tuesday revealed that consumer confidence in Australia remained unchanged from the previous month in early March. Despite this, confidence levels continued to hover around COVID-era lows due to the country's struggle with high inflation and increasing interest rates.
The Westpac-Melbourne Institute Consumer Sentiment index remained constant at 78.5 in March, as per a report from Westpac. While this level was still near its lowest point since March 2020, the bank noted that it was uncommon to have two consecutive months of low consumer confidence, indicating rising concerns about inflation among the general public.
In addition, consumers in Australia are expecting further interest rate hikes by the Reserve Bank of Australia (RBA), which has already had a negative impact on the country's economy. RBA Governor Philip Lowe has indicated that the bank may pause its rate hikes as early as April if inflationary pressures ease, but some experts predict that the bank will continue to raise rates until May.
The Australian dollar initially declined as investors anticipated a slowdown in the pace of future rate hikes, but if the RBA follows through with raising rates until May, it could ultimately benefit the AUD/USD pair.
US Dollar Rebounded Ahead of US CPI
On Sunday, the Federal Reserve developed a contingency plan to mitigate the damage to the US banking system caused by Silicon Valley Bank's (SVB) collapse, reducing market risk.
Traders are eagerly anticipating the US Consumer Price Index (CPI) report on Tuesday, with some market experts revising their expectations for a 50 basis point (bps) rate hike by the Fed on March 22.
As a result, the dollar is strengthening, with the US Dollar Index (DXY) trading at 103.89, a 0.28% increase in the last 24 hours. The yield on US 10-Year Bonds has also risen to 3.564%.
A continuously rising interest rate may weaken the banking system, and high inflation rates pose a double challenge for central banks. As a result, the upcoming US Consumer Price Index (CPI) will be crucial to observe since it will further complicate the Federal Reserve's position.
Traders expect a decrease in the US CPI, which could lead to a reversal of the Fed's aggressive stance and a potential increase in the AUD/USD price.
AUD/USD Intraday Technical Levels
AUD/USD – Technical Outlook
The AUD/USD pair has fallen below the 0.6665 level and is currently bearish, heading towards the second target of 0.6550. It is currently trading within a bearish channel, increasing the likelihood of further bearish corrections, and a potential decline towards 0.6400.
The bearish wave continues to be supported by the EMA50, and a negative momentum may be necessary to break through and reach the expected target.
However, if the pair manages to surpass the 0.6665 level, it could prevent the anticipated decline and initiate recovery attempts, with an initial target of 0.6780. The expected trading range for the day is between the support level of 0.6500 and the resistance level of 0.6620.
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