Technical Analysis

AUD/USD Price Analysis – April 02, 2024

By LonghornFX Technical Analysis
Apr 2, 20244 min

Daily Price Outlook

Despite the renewed strength of the US dollar, the AUD/USD currency pair has managed to stop its previous losses and regained some traction around the 0.6499 level. However, this mild bullish performance of the AUD/USD pair can be attributed to several factors, including the strength shown by the Australian economy. Despite global economic challenges, Australia has shown a strong recovery, supported by strong domestic demand and ongoing fiscal stimulus measures. Moreover, rising commodity prices, especially for key exports like iron ore, have bolstered Australia's export earnings and contributed to the positive sentiment surrounding the Australian dollar.

On the other hand, the Reserve Bank of Australia (RBA) is cautiously optimistic and committed to helping the economy with supportive monetary policies. Despite ongoing inflation worries, the RBA's actions have given stability and confidence to investors, boosting the AUD/USD pair's upward movement.

RBA Minutes and Impact on AUD/USD Currency Pair

It is worth noting that the recent RBA meeting minutes showed that the bank is not thinking about raising interest rates and this was not surprising to markets because the RBA is focused on helping the economy recover and managing inflation using other methods. However, the decision to keep rates unchanged had a mixed impact on the AUD/USD pair. Initially, it caused a small drop in the Australian dollar against the US dollar, but overall, the market stayed positive because of the RBA's supportive policies, which helped the AUD/USD pair to regain its traction.

Chinese Yuan's Performance and Its Impact on AUD/USD Currency Pair

On the other side, the Chinese Yuan recently dropped to its lowest level in four-and-a-half months, leading China to take steps to stabilize its currency and boost economic growth. It should be noted that China's National Bureau of Statistics (NBS) reported better manufacturing and non-manufacturing PMI figures, suggesting a potential economic recovery. These improvements in China, along with efforts to support the Yuan, have indirectly helped the Australian dollar due to Australia's close trade relationship with China.

If China's economy keeps improving, it could lead to higher demand for Australian exports, which would benefit the AUD/USD pair.

US ISM Manufacturing PMI and Fed's Stance on Interest Rates

On the US front, the rise of the US ISM Manufacturing PMI to its highest level since September 2022, along with other positive economic data, has strengthened the US dollar and increased expectations for a less dovish stance from the Federal Reserve. Federal Reserve Chairman Jerome Powell's recent comments, expressing contentment with inflation data and suggesting a cautious approach to interest rate adjustments, have contributed to the dollar's strength.

Therefore, the strengthened US dollar, fueled by positive economic data and expectations of a less dovish stance from the Federal Reserve, has put downward pressure on the AUD/USD pair due to the inverse relationship between the two currencies.

AUD/USD Price Chart - Source: Tradingview
AUD/USD Price Chart - Source: Tradingview

AUD/USD - Technical Analysis

The AUD/USD pair on April 2 exhibits slight bearishness, trading at 0.64885, a decrement of 0.01%. The currency pair is currently hovering around a critical pivot point at 0.6498, which may serve as a juncture for potential directional shifts. Resistance levels are established at 0.6515, 0.6539, and 0.6557, marking thresholds where the price may encounter upward pressure. Conversely, support is found at 0.6474, 0.6462, and 0.6443, which could provide a foundation for price stabilization or a rebound.

The technical landscape is shaped by the 50-Day Exponential Moving Average (EMA) at 0.6515 and the Relative Strength Index (RSI) at 37, both of which signal a bearish inclination, corroborated by the prevailing downward trendline and bearish channel observed in the 2-hour timeframe.

In conclusion, the AUD/USD pair presents a bearish outlook below the pivot of 0.6498. Traders may consider a selling strategy below the 0.64979 mark, targeting a profit at 0.64615 while placing a stop loss at 0.65157, paying close attention to the identified technical levels and indicators for any shifts in market dynamics.

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