Daily Price Outlook
The AUD/USD currency pair initially showed signs of a bullish trend, but it could not sustain the momentum and experienced a significant drop after encountering strong resistance near 0.6590 during the European session. However, the decline was primarily driven by a major rebound in the US Dollar Index (DXY) as traders eagerly awaited the release of the United States Nonfarm Payrolls (NFP) data at 12:30 GMT.
The NFP report is highly anticipated and could have a major impact on the movement of the currency pair. As a result, the market sentiment is cautious, with investors exercising caution and refraining from making bold moves until the crucial economic data is unveiled.
Impact of US Market Developments on AUD/USD Currency Pair
The AUD/USD currency pair could be influenced by recent developments in the US markets. However, the significant gains in S&P500 futures and the rebound of the US Dollar Index (DXY) around 102.40 indicate strength in US equities and a hopeful sentiment ahead of the labor market report. Thereby, the positive US labor market data may lead to concerns among Federal Reserve policymakers, potentially triggering a recovery in inflationary pressures.
Consequently, the AUD/USD pair might face pressure as the US Dollar strengthens, possibly resulting in a decline in its value. Traders must closely monitor US labor market data and its impact on inflation, as these factors could significantly influence the AUD/USD pair's short-term movement.
RBA Minutes and Inflation Target Weigh on AUD/USD Pair
Despite the recent release of less-hawkish RBA minutes from August, the Australian Dollar failed to gain support. The RBA policymakers expressed the possibility of further tightening due to inflation moving towards the 2% target by late 2025. This cautious stance could limit the Aussie's upward momentum, potentially putting downward pressure on the AUD/USD pair as investors reevaluate their expectations for the RBA's monetary policy outlook.
Thereby, traders need to closely monitor any updates in the RBA's stance and its impact on inflation to better understand the potential direction of the AUD/USD pair in the short term.
AUD/USD - Technical Analysis
The AUD/USD pair made a valiant attempt to break through the 0.6550 level but encountered robust support, leading to a momentary wavering just above it. Meanwhile, the Stochastic indicator has climbed to overbought levels, fueling speculation of a potential return to negative trading and a possible breach of the aforementioned support, which could then open the path towards 0.6400 as the next significant target.
As the battle between bulls and bears unfolds, the dominant outlook points towards a continued downward trend in the intraday and short-term levels. However, if the 0.6550 level manages to hold firm against negative pressure, it could effectively halt the bearish scenario and propel the price higher, introducing a twist to the narrative.
Market participants are bracing themselves for today's trading, anticipating a range between the support level of 0.6500 and the resistance level of 0.6600. The tension rises as we eagerly await the outcome of this exciting market dynamic!
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