Technical Analysis

AUD/USD Price Analysis – Feb 22, 2024

By LonghornFX Technical Analysis
Feb 22, 20243 min

Daily Price Outlook

AUDUSD currency pair has been on a bullish trend and gaining traction continually above the 0.6583 level. It was supported by the risk-on market sentiment as well as the upbeat preliminary Australian Purchasing Managers Index (PMI) data, which typically strengthens the AUD by signaling economic growth and increased investor confidence. Furthermore, the broad-based US dollar bearish bias was seen as another key factor that helped the AUD/USD pair to stay bid.

Australian Economic Data and Potential Effects on the AUD/USD Pair

At the data front, Australia's Judo Bank Composite PMI rose to 51.8 in February, indicating growth in the private sector after five months of decline. In the meantime, the Services PMI also improved to 52.8, signaling a positive trend. Conversely, the Manufacturing PMI dropped to 47.7 due to a fall in new orders. Meanwhile, the Wage Price Index increased by 0.9% in Q4, slightly lower than expected. Moreover, the ANZ-Roy Morgan Consumer Confidence edged up but remains below the 85 mark for 55 weeks. However, the RBA's Meeting Minutes discussed the possibility of a rate hike but agreed to wait due to the gradual nature of inflation's return to target levels.

Therefore, the mixed data could lead to mixed impacts on the AUD/USD pair. Positive PMI figures may support the AUD, but lower Manufacturing PMI and a cautious RBA stance could limit gains.

US Economic Indicators and Their Potential Impact on the AUD/USD Pair

At the US front, the FOMC Minutes hinted at holding off on rate cuts, which influencing the market sentiment. Despite rising Treasury yields, the US Dollar faced bearish pressure as traders awaiting various business activity surveys to assess the global economic health. Market expectations suggest a 70% chance of a rate cut by June, with a 52.2% probability of easing starting then. Meanwhile, Richmond Fed President Barkin sees progress in inflation and employment but notes challenges with recent PPI and CPI figures, indicating lingering disinflation issues.

Therefore, the mixed signals from the US, with hints of delayed rate cuts and inflation concerns, impacted the AUD/USD pair.

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

AUD/USD - Technical Analysis

In the recent trading session, the AUD/USD pair has shown modest growth, marking a 0.09% increase to reach 0.65578. This slight upward movement is indicative of a cautiously optimistic sentiment among traders, as the Australian dollar finds a gentle lift against its US counterpart. The 4-hour chart perspective offers a nuanced view into the currency pair's dynamics, as it maneuvers through the ebbs and flows of global economic indicators and policy decisions from central banks.

The pivot point for the AUD/USD pair is established at 0.65387, acting as a foundational marker for potential price direction. Resistance levels are seen at 0.65769, 0.66030, and 0.66253, outlining the hurdles that the pair might encounter on its upward journey. Conversely, support levels at 0.64968, 0.64772, and 0.64531 provide a safety net, potentially cushioning any downward movement and offering rebound opportunities.

The Relative Strength Index (RSI) stands at 56, suggesting a mildly bullish momentum without nearing overbought conditions, indicating that there may be room for further appreciation. The 50-day Exponential Moving Average (EMA) at 0.65326 further supports this view, as the current price is above this level, reinforcing the notion of a sustained upward trend in the near term.

Considering the alignment of technical indicators with key price levels, the AUD/USD currency pair presents a cautiously optimistic outlook. Traders might consider adopting a strategy that involves initiating long positions above 0.65626, aiming for a take profit target at 0.65978, while placing a stop loss at 0.65360 to mitigate potential risks. This strategic approach seeks to leverage the current bullish sentiment, aiming to capture gains from potential upward movements while employing prudent risk management.



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