AUD/USD Price Analysis – May 08, 2023

Daily Price Outlook

The AUD/USD pair continues its upward trend for the sixth consecutive day, touching a three-week high near 0.6785 early Monday in Europe. In the process, the Australian dollar follows the 100-day moving average (DMA) within a rising trend channel, with various levels observed since March.

With positive MACD signals and a favorable RSI (14) line that isn't overbought, AUD/USD buyers are likely to surpass the primary barrier at 0.6790, which encompasses the 100-day moving average.

However, overbought conditions at the 0.6800 round figure and the upper line of the mentioned bullish channel, currently around 0.6810, may present a challenge for AUD/USD bulls later on.

If the Aussie pair buyers maintain momentum beyond 0.6810, 0.6855, and 0.6900, they will test the pair buyers before approaching the mid-February peak near 0.7030.

The highlighted channel's lower line around 0.6600 and the 61.8% Fibonacci retracement level near 0.6545, also known as the golden Fibonacci ratio, could then challenge the Aussie pair sellers before granting them control.

In summary, the AUD/USD remains on the bulls' radar, although the uptrend faces some obstacles.

During the Asian session, the AUD/USD pair revisited its daily high of 0.6770. The Australian dollar's positive inclination is a consequence of multiple headwinds facing the US dollar. Concerns about US banking uncertainties, delays surrounding the debt ceiling situation, and disappointing nonfarm payrolls (NFP) data are hindering the US dollar's rebound.

The US Dollar Index (DXY) continues to decline, with expectations that it will test the previous week's low of around 101.00. US President Joe Biden has been criticized for addressing the debt ceiling with Republicans so late, as the US Treasury Department fears it will run out of funds by early June and be unable to fulfill its payment obligations. This would not only tarnish the US economy's outlook but also result in millions of job losses and a considerable decline in economic activity.

Investors are awaiting the release of Australia's quarterly retail sales figures. Preliminary data suggests that quarterly retail sales will fall by 0.4%, compared to the previous decline of 0.2%. Consequently, the Reserve Bank of Australia (RBA) may maintain stable interest rates, as decreasing retail sales do not support policy tightening.

AUD/USD – Technical Outlook

The AUD/USD pair has successfully broken through the bearish channel's resistance and is approaching our initial optimistic target at 0.6780. We could see further gains up to the 0.6925 area if it surpasses this level.

As a result, we expect the bullish trend to continue for the time being but keep in mind that if the pair fails to break through as anticipated, the price might bounce back and head toward the 0.6665 level for a test. Today's predicted trading range is between 0.6720 support and 0.6830 resistance.

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