Technical Analysis

AUD/USD Price Analysis – Dec 05, 2024

By LonghornFX Technical Analysis
Dec 5, 20245 min
Audusd

Daily Price Outlook

The AUD/USD pair continues to struggle, staying under pressure near the 0.6421 mark. The main reason for its downward trend seems to be weak Australian economic data and growing expectations that the Reserve Bank of Australia (RBA) might cut interest rates soon, which has been dragging the Aussie lower.

Additionally, worries about potential tariffs on imports from President-elect Donald Trump are adding to the pressure on the AUD.

Traders are closely watching the upcoming US data, including the Initial Jobless Claims and Goods Trade Balance report on Thursday, for any new clues. If the US labor market shows signs of weakness, it could weaken the US dollar and ease the losses for the pair.

On Friday, the US Nonfarm Payrolls (NFP) report for November will be in focus, as it could give a clear direction for the market.

Mixed Economic Data and RBA Rate Cut Expectations Weigh on AUD/USD Pair

On the data front, Australia’s trade surplus rose to 5.953 billion AUD in October, up from 4.532 billion AUD in September (revised from 4.609 billion AUD). This was better than the expected 4.500 billion AUD, showing a positive trade performance.

However, Australia’s GDP growth for the third quarter (Q3) was only 0.3% compared to 0.2% in the previous quarter (Q2). This was below the market expectation of 0.4% growth, signaling weaker-than-expected economic performance.

In contrast, Australia’s Judo Bank Services PMI improved to 50.5 in November from 49.6 in October, surpassing the forecast of 49.6. While this suggests some growth in the services sector, the overall economic data has been disappointing.

This, along with rising expectations of an interest rate cut by the Reserve Bank of Australia (RBA), has been pushing the Australian dollar (AUD) lower.

On top of that, concerns over potential tariffs on imports from President-elect Donald Trump are adding to the pressure on the AUD. These factors combined make the outlook for the Aussie currency appear uncertain.

Therefore, the mixed economic data, along with expectations for an RBA rate cut and concerns over potential tariffs, have put pressure on the Australian dollar. This has contributed to the ongoing weakness of the AUD/USD pair, pushing it lower.

US Economic Data Shows Slower Growth, Fed Signals Possible Slowdown in Rate Cuts

On the US economic data front, the ISM Services PMI dropped to 52.1 in November, down from 56.0 in October. This was weaker than the expected 55.5, indicating a slowdown in the services sector.

Similarly, the S&P Global Composite PMI fell to 54.9 from 55.3, and the Services PMI decreased to 56.1 from 57.0. All of these figures were below expectations, pointing to a slowdown in economic activity.

Despite this, Fed Chair Jerome Powell stated that the US economy is performing stronger than expected, allowing the Federal Reserve to possibly slow down the pace of interest rate cuts.

He mentioned that the economy is in a better position than when the Fed started reducing rates in September. Additionally, San Francisco Fed President Mary Daly emphasized that the central bank doesn’t need to rush with rate cuts, as there is still work to be done to reach 2% inflation and sustained growth.

The CME FedWatch Tool suggests there is a 77.5% chance that the Fed will cut rates by 0.25% in December, while a 22.5% chance remains for no change.

Traders will closely watch the US Initial Jobless Claims and Goods Trade Balance reports on Thursday for any new signs of weakness. The US Nonfarm Payrolls (NFP) report on Friday will also be key for market direction.

Therefore, the weaker US economic data may limit the US dollar's strength, potentially offering some support for the Australian dollar (AUD). However, ongoing rate cut expectations from the Reserve Bank of Australia (RBA) could keep the AUD/USD pair under pressure.

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

AUD/USD – Technical Analysis

AUD/USD is trading at $0.64402, up 0.16% during the session, showing mild bullish momentum while hovering near the pivot point at $0.64472.

The pair is navigating a cautious market, with immediate resistance at $0.64927, followed by higher levels at $0.65259 and $0.65575.

On the downside, support lies at $0.64154, with additional levels at $0.63763 and $0.63475, marking critical areas to watch for potential bearish moves.

Technical indicators highlight a mixed outlook. The RSI at 43 reflects a lack of strong momentum, leaning slightly toward bearish sentiment.

The 50-day EMA at $0.64712 acts as a resistance barrier, keeping upward movements in check. A failure to break above this EMA may signal continued pressure on the pair.

Price action suggests traders should watch for a potential breakdown below the pivot point of $0.64472, which could expose AUD/USD to lower support levels around $0.64154.

The pair’s performance aligns with broader market themes, including Federal Reserve policy expectations and commodity price dynamics. Entry is recommended below $0.64473 for short positions, targeting $0.63959 with a stop-loss set at $0.64775 to mitigate risk.

On the flip side, a sustained move above $0.64927 could trigger bullish momentum, though current indicators favor a neutral-to-bearish trajectory.

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AUD/USD

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