Technical Analysis

AUD/USDPrice Analysis – May 02, 2023

By LonghornFX Technical Analysis
May 2, 20233 min

Daily Price Outlook

The AUD/USD pair hit a peak of 0.6667 but could not maintain half of its intraday gains and eventually settled around the 0.6630 price range by the end of the day. In the Asian trading session, the pair traded steadily around this price.

The Australian dollar benefited from the positive performance of Wall Street, where the US indexes rose due to better-than-expected American data and JP Morgan's announcement of taking over the failing First Republic Bank.

Although macroeconomic data from Australia earlier in the day did not support the Australian dollar, with the S&P Global Manufacturing PMI printing at 48 in April, down from the 48.1 recorded in March, and the April TD Securities inflation rate was 6.15 YoY, up from the previous 5.7%, the AUD/USD still rose due to Wall Street's strong performance, driven by better-than-expected American data and JP Morgan's acquisition of the struggling First Republic Bank. However, the AUD/USD lost momentum as US dollar demand increased.

During its May meeting, the Reserve Bank of Australia (RBA) board voted to raise the Official Cash Rate (OCR) by 0.25% to 3.85%. However, the market had anticipated the RBA's lack of action, indicating a strong reaction to the central bank's unexpected move.

In reaction to the recent hawkish move of the Australian central bank, the AUD/USD pair has risen by approximately 60 points, reaching 0.6684. This marks the third consecutive trading day that the pair has traded higher.

The RBA Raises Official Cash Rate by 0.25% in May

When the Reserve Bank of Australia announces its interest rate decision, it can have a bullish effect on the AUD if interest rates are raised and the economy's inflation potential is acknowledged.

Conversely, it is considered bearish or negative if the RBA has a dovish outlook on the Australian economy and supports the current interest rate or lowers it.

The attention shifts toward the AUD/USD pair, as Duncan Cooper examines the market conditions and presents a detailed analysis of potential trading prospects. Emphasizing the significance of technical analysis and market perspective, he evaluates crucial support and resistance levels.

 AUD/USD Price Chart - Source: Tradingview

AUD/USD – Technical Outlook

From a technical perspective, examining the four-hour timeframe, the AUD/USD currency pair has formed a significant bullish engulfing candle, breaking through the 0.6664 resistance level and now targeting the next level at 0.6760. Simultaneously, a downward trendline is providing major support around the 0.6705 level.

As a result, the AUD/USD may experience a bearish correction until it reaches 0.6664. Closing above this level would signal an opportunity to open a long position in AUD/USD. Prior to that, a stop-loss should be placed around the 0.6620 level, while the upside targets could be around 0.6760 or 0.6795.



24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.