Daily Price Outlook
During the early European session, the AUD/USD pair is declining towards the psychological support level of 0.6500. The Australian currency is facing significant selling pressure due to the US Dollar Index (DXY) reaching a new 10-week high at 104.45. This is driven by expectations of the Federal Reserve (Fed) continuing to raise interest rates to address persistent inflation in the United States.
Investors are cautious about the trading day on Tuesday, following a long weekend, leading to a reduction in gains made in the Asian session for S&P 500 futures. The anticipation of another interest rate hike from the Federal Reserve has created a sense of caution in the market.
The US Dollar Index (DXY) has regained its 10-week high as investors shift their focus from the US debt ceiling issue to the Federal Reserve’s upcoming monetary policy meeting in June.
The announcement of an increase in the US borrowing cap by the White House has put pressure on US Treasury yields, causing the 10-year US government bond yields to drop below 3.77%.
The release of US employment data this week will serve as a basis for the Federal Reserve’s decision on monetary policy in June.
The first employment statistic, US JOLTS Job Openings data, will be released on Wednesday. It is expected to show a decline to 9.35 million from the previous release of 9.59 million, indicating a slowdown in hiring by businesses due to a less optimistic economic outlook. The May employment change data from US Automatic Data Processing (ADP) will also be discussed.
According to estimates, the US economy added 170,000 new jobs in May, compared to the previous month’s addition of 269,000. The Nonfarm Payroll (NFP) data, to be released at the end of the week, will be crucial in assessing the labor market’s performance.
AUD/USD – Technical Outlook
The AUD/USD pair is currently experiencing a significant bearish sentiment near the 0.6515 level. The selling pressure intensified when the pair was unable to surpass the 38.2% Fibonacci retracement level, which acted as a strong resistance around 0.6555. The candlestick patterns closing below this level indicate a potential continuation of the downtrend in the Australian dollar.
On the four-hour timeframe, the RSI is below 50, indicating a bearish bias, while the MACD is showing smaller histograms compared to previous ones, suggesting a strong selling pressure in the AUD/USD pair.
Moreover, the 50-day moving average is acting as a resistance around the 0.6520 level, and the candlestick closing below this moving average supports the possibility of further bearish continuation.
Consequently, the outlook for the AUD/USD currency pair today is bearish. It is important to monitor the 0.6530 level and consider short positions with a target around the 0.6489 level.
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