Technical Analysis

AUD/USD Price Analysis – Dec 10, 2024

By LonghornFX Technical Analysis
Dec 10, 20244 min
Audusd

Daily Price Outlook

During the European trading session, the AUD/USD pair continued to struggle, staying under pressure near 0.6394. This drop came after the Reserve Bank of Australia (RBA) decided to keep the Official Cash Rate (OCR) at 4.35% during its final policy meeting of the year.

RBA Governor Michele Bullock, addressing the media, explained why the central bank held the rate steady at its 12-year high for the ninth straight meeting in December.

On the other side, the US Dollar remained strong, marking its third day of gains. This was driven by cautious market sentiment ahead of the US Consumer Price Index (CPI) data release on Wednesday.

According to the CME FedWatch Tool, traders are betting on an 85.8% chance of the Federal Reserve reducing rates by 25 basis points in its December 18 meeting.

On the bright side for the Aussie Dollar, China’s improved economic sentiment provided some relief. Chinese leaders announced plans for proactive fiscal measures and looser monetary policies in 2024 to boost domestic consumption, offering a glimmer of hope for Australia’s trade-reliant economy.

RBA's Steady OCR and China's Economic Stimulus Create Mixed Outlook for AUD/USD

As we mentioned, the Reserve Bank of Australia (RBA) decided to keep its Official Cash Rate (OCR) at 4.35% during its final meeting of the year.

This marks the ninth consecutive meeting at this 12-year high, as Governor Michele Bullock emphasized the need to stay vigilant about inflation risks despite some improvement.

Australia’s economy faces challenges, with GDP growth slowing to 0.3% in the September quarter, missing expectations.

Meanwhile, unemployment remained steady at 4.1% in October, with a modest addition of 15,900 jobs. Inflation eased slightly to 3.5% in the third quarter but remains above the RBA’s 2%-3% target, fueling debates over potential rate cuts next April.

China’s economic developments also influenced the Australian Dollar (AUD). Chinese President Xi Jinping expressed confidence in achieving economic targets, reinforcing China’s role as a global growth driver.

Although China’s trade balance improved to CNY 692.8 billion in November, exports and imports grew at slower rates compared to October.

In the meantime, the weak inflation data (-0.6% in November) highlights challenges but has led to expectations of further stimulus.

Chinese leaders plan to boost domestic consumption in 2024 through fiscal and monetary policies, which has supported AUD sentiment, given Australia’s strong trade ties with China.

Therefore, the RBA's decision to maintain the OCR at 4.35% and China's economic stimulus plans have mixed effects on the AUD/USD pair.

While China's stimulus expectations support the AUD, Australia's economic slowdown and inflation risks keep the pair under pressure, limiting gains.

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

AUD/USD – Technical Analysis

The AUD/USD pair is trading at $0.63942, down 0.70% in the latest session, pressured by a stronger U.S. Dollar and risk-off sentiment in global markets. The price remains below its pivot point of $0.64289, signaling continued bearish momentum.

The 50-day EMA at $0.64259 serves as a key resistance level, aligning closely with the pivot, further restricting any upward attempts. Meanwhile, the RSI at 39 reflects bearish momentum, but it has yet to reach oversold conditions, leaving room for further declines.

Immediate support is located at $0.63729, with stronger levels at $0.63435 and $0.63174 providing additional safety nets.

On the upside, immediate resistance lies at $0.64719, followed by higher hurdles at $0.65030, presenting challenges for any recovery attempts. The bearish sentiment is further reinforced by the descending trendline, which caps upward moves.

The current setup indicates a high probability of further downside pressure unless the price can reclaim the $0.64289 pivot. A break below $0.63729 could open the door to sharper declines, testing $0.63435 and beyond.

Conversely, a close above $0.64289 would challenge the bearish narrative and target $0.64719 as the next key level.

For traders, selling below $0.64040 with targets near $0.63717 remains a favorable strategy, while maintaining stops above $0.64300 to mitigate risk.

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