Technical Analysis

AUD/USD Price Analysis – Aug 21, 2023

By LonghornFX Technical Analysis
Aug 21, 20232 min

Daily Price Outlook

The AUD/USD currency pair was unable to stop its losing streak and remained depressed around below 0.6400 mark. However, this decline can be attributed to the recent smaller rate cut by the People’s Bank of China (PBoC), indicating limited support for the economy despite worries about the property market crisis. This uncertainty has left investors hesitant, leading to a decline in the riskier Australian Dollar. In the meantime, the weakening sentiment has also impacted markets, putting additional pressure on the AUD. Furthermore, the stronger US Dollar, supported by the potential for a Fed interest rate hike, was also contributing to the downward pressure on the AUD/USD pair.

US Dollar Strength and Factors Affecting AUD/USD Pair

The broad-based US dollar, tracked by the USD Index (DXY), is staying just below its highest level in over two months due to the Federal Reserve's likely plans to raise interest rates. However, the recent minutes from the July meeting of the Federal Open Market Committee (FOMC) show they're focused on controlling inflation. Furthermore, the US economy is doing well, according to recent data, supporting the idea that the Fed might tighten policy more.

At the same time, the expectation that the US central bank will keep rates higher for a while is keeping US Treasury bond yields up and helping the US dollar. This suggests the AUD/USD pair will likely continue to fall. However, traders who are expecting a drop might not make big bets before the Jackson Hole Symposium this week. Central bankers' comments there could cause a lot of ups and downs in the markets.

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

AUD/USD - Technical analysis

The AUD/USD pair maintains its fluctuation around the 0.6400 level, encountering challenges in achieving a decisive breakthrough. It is worth noting that the stochastic indicator is once again indicating a loss of positive momentum.

This development is anticipated to contribute to propelling the price towards a successful breach of this level, subsequently extending the decline on both the intraday and short-term scales. It is important to highlight that our next identified target stands at 0.6310.

Consequently, our outlook continues to lean towards a bearish trajectory for the forthcoming period, provided the price remains stable below the 0.6440 threshold. The projected trading range for the day spans between the support at 0.6350 and the resistance at 0.6450.

In terms of the anticipated trend for today, a bearish sentiment prevails.



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