Technical Analysis

AUD/USD Price Analysis – April 25, 2024

By LonghornFX Technical Analysis
Apr 25, 20244 min

Daily Price Outlook

During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well-bid around the 0.6528 level, hitting the intraday high of $0.6531. However, the upward rally was driven by multiple positive factors including hawkish sentiment regarding the RBA monetary policy stance and the release of robust Australian Consumer Price Index (CPI) figures.

The hawkish sentiment towards the RBA's monetary policy stance, coupled with robust CPI figures, typically boosts the AUD currency due to expectations of potential interest rate hikes. Furthermore, the risk-on market sentiment, backed by easing tensions in the Middle East, has played a major role in underpinning the AUDUSD currency pair.

Impact of Australian Economic Data and RBA Expectations on AUD/USD Pair

On the data front, Australia's Consumer Price Index (CPI) exceeded expectations, rising by 1.0% in the first quarter of 2024 quarter-on-quarter and 3.6% year-on-year. This was higher than the forecasted 0.8% and 3.4%, respectively, indicating a strong inflationary trend. Meanwhile, the Monthly Consumer Price Index for March also surpassed expectations, reaching 3.5% year-on-year.

Conversely, in Australia, the Judo Bank Composite Output Index rose in April, showing the third consecutive month of expansion in the private sector, primarily driven by the service sector, while manufacturing output declined at a slower rate compared to previous months.

Therefore, the stronger-than-expected CPI and positive private sector growth in Australia strengthen the AUD against the USD.

Furthermore, the upticks in the AUD/USD pair were further bolstered by the growing expectations of a more hawkish stance from the Reserve Bank of Australia (RBA) on interest rates. Luci Ellis, chief economist at Westpac and former RBA Assistant Governor (Economic), highlights that inflation slightly exceeded expectations in the March quarter.

Westpac predicts the RBA will maintain interest rates in May and has revised their forecasted date for the first rate cut from September to November this year. Luci Ellis's remarks on higher inflation and delayed rate cuts boost AUD/USD, signaling a hawkish RBA stance and economic strength.

US Economic Indicators and Market Sentiment's Impact on AUD/USD Pair

On the US front, the US Dollar is unable to extend its upward trend and has turned bearish recently, possibly due to risk-on market sentiment. However, the Greenback's losses might be offset by slight gains in US Treasury yields. The upcoming release of the preliminary Q1 Gross Domestic Product (GDP) figures from the United States is anticipated on Thursday, with expectations of a growth rate slowdown.

These figures will offer insights into the US economy's strength and could hint at the Federal Reserve's (Fed) future moves. If the GDP report shows better-than-expected numbers, it could lead to speculation that the Fed will delay its rate-cut plans.

On the data front, the US Census Bureau's latest report showed that in March, orders for durable goods increased by 2.6%, marking a positive sign for manufacturing. Excluding transportation, new orders rose by 0.2%. On the flip side, the Federal Reserve plans to maintain higher interest rates for a longer period due to ongoing inflation.

This decision comes after robust US consumer inflation data and hawkish remarks from Fed officials. This was seen as one of the key factors that cap losses in the US dollar and limit the upside momentum of the AUD/USD pair.

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

AUD/USD - Technical Analysis

Today, the Australian Dollar (AUD/USD) recorded a slight uptick, trading at 0.65098, a 0.20% increase. This movement situates the currency pair near critical levels on the four-hour chart that could dictate short-term market dynamics.

The AUD/USD is currently navigating just below a key pivot point set at 0.65345. This level could serve as a springboard for further advances if the pair manages to breach it convincingly. Immediate resistance is closely placed at 0.65362, followed by more substantial barriers at 0.65761 and 0.66157. These figures represent crucial thresholds that could define the bullish potential in upcoming trading sessions.

From a technical perspective, the Relative Strength Index (RSI) is at 66, indicating a slightly overbought condition but not enough to deter potential bullish momentum. Additionally, the 50-day Exponential Moving Average (EMA) at 0.64483 supports the currency pair from below, further validating the bullish sentiment in the market.

Given the current market setup, adopting a tactical trading approach could be beneficial. A buy limit order at 0.64832 with a take profit target at the pivot point of 0.65345 and a stop loss at 0.64523 would leverage potential upward movements while effectively managing risk.

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