AUD/USDPrice Analysis – April 28, 2023

Daily Price Outlook

The AUD/USD pair experienced a significant drop following an unsuccessful attempt to rally during the Asian trading session, as it failed to surpass the 0.6640 level.

The Australian currency faced selling pressure as investors shifted their funds to the US Dollar Index (DXY) due to concerns about the Federal Reserve's decisions on monetary policy.

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Market participants' risk appetite is being affected by the anticipation of the Federal Reserve's policy announcement, leading to a continued correction of the S&P500 futures during the Asian session.

The USD Index has made a strong recovery, surpassing the key resistance level of 101.70.

With the market widely expecting another interest rate hike from the Fed, there has been an unexpected drop in the demand for US government bonds. Consequently, the 10-year US Treasury yield has significantly increased, reaching 3.53%.

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Despite the recent quarter's Gross Domestic Product (GDP) data revealing a significant decline, the USD Index maintained its downward trajectory on Thursday.

The GDP for the first quarter dropped by 1.1%, in contrast to the prior 2.6% growth. Faced with a pessimistic economic outlook, businesses reduced their inventory to counterbalance consumer expenses.

Nevertheless, this situation allows companies to begin the second quarter with minimal stock.

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The Australian dollar is facing significant pressure due to expectations that the Reserve Bank of Australia (RBA) will maintain its neutral stance on interest rates. RBA Governor Philip Lowe has kept the Official Cash Rate (OCR) at 3.60%, believing that the current interest rate levels are sufficient to manage sustained inflation.

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The rationale for keeping the current interest rate policy is supported by the notable deceleration in Australia's Producer Price Index (PPI) inflation for the first quarter. The quarterly PPI growth has been slower, at 1.0%, compared to the earlier figure of 1.7% and the forecast of 1.5%. The annual PPI has been lowered to 5.2% from the prior release of 5.8%.

AUD/USD – Technical Outlook

The AUDUSD pair continues to fall, approaching our predicted goal of 0.6550, which we believe will pave the way for a more major negative correction with the next target at 0.6400.

As a result, we continue our pessimistic stance for today unless the price rises to and stays above 0.6665.

Today's trading range is expected to be between 0.6560 support and 0.6670 resistance.

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