AUD/USD Price Analysis – Dec 31, 2024
Daily Price Outlook
The Aussie Dollar (AUD) was quiet against the US Dollar (USD) after China released its December Manufacturing and Non-Manufacturing PMI numbers. China’s official Manufacturing PMI came in at 50.1, down from 50.3 and missed expectations. Non-Manufacturing PMI jumped to 52.2, up from 50.0 and above expectations of 50.2.
As Australia’s largest trading partner, we feel the ripples of China’s economic movements. The weak manufacturing data has us worried about exports, while the bounce in the service and construction sectors is a glimmer of hope.
RBA and Market Sentiment
RBA minutes showed the board is cautiously optimistic on inflation. They reiterated that they will keep rates on hold until inflation is more clearly stable. RBA Governor Michele Bullock said Australia’s labour market is more resilient than other countries so they can delay rate cuts compared to other central banks.
US Dollar Index (DXY) held around 108.00 as expectations of fewer Fed rate cuts in 2025. US Treasury yields fell on Monday with 2-year at 4.24% and 10-year at 4.53%. This left the AUD exposed to external winds and geopolitics.
Geopolitics and Economic Policy
Russia-Ukraine conflict and Middle East tensions added to the risk premium on the AUD. Traders are also worried about President-elect Trump’s policies and tariffs will increase costs. Add to that the Fed’s reluctance to cut rates and we have market uncertainty.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.62160, down 0.07%, reflecting continued bearish sentiment. The pivot point at $0.62433 acts as a critical juncture, with the pair struggling to regain upward momentum.
Immediate resistance lies at $0.62755, followed by $0.63058 and $0.63439, marking key levels for a potential bullish recovery. On the downside, support levels are seen at $0.62004, with deeper protection at $0.61576 and $0.61208.
The 4-hour chart shows the pair trading below its 50 EMA at $0.62257, signaling near-term weakness in the broader downtrend. The Relative Strength Index (RSI) is at 45, reflecting neutral-to-bearish conditions without signaling oversold levels.
A decisive break below the support at $0.62004 could intensify selling pressure, targeting the next critical level at $0.61576. Conversely, a move above $0.62433 would invalidate the bearish setup and may pave the way for a recovery toward $0.62755.
Market sentiment remains cautious as traders weigh concerns over global growth prospects and subdued commodity demand, which often weighs on the Australian dollar.
With thin year-end liquidity, the pair's movement will depend heavily on holding critical support levels while breaking resistance at $0.62433 for bullish momentum to emerge.
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