AUD/USD Price Analysis – July 18, 2024

Daily Price Outlook

Despite the renewed strength of the US dollar, the AUD/USD currency pair was able to maintain its upward trend and remained well-bid around the 0.6736 level, hitting an intra-day high of 0.6744.

The reason for this upward rally can be attributed to the previously released stronger domestic jobs report, which supports the case for another possible rate hike by the Reserve Bank of Australia (RBA).

This underpinned the Australian currency. Additionally, the risk-on sentiment in the market was seen as another key factor that underpinned the riskier Australian dollar and contributed to the AUD/USD pair's gains.

On the other hand, the US dollar managed to stop its early-day losses and gained positive traction, which was seen as a key factor that kept the lid on any additional gains in the AUD/USD pair. Meanwhile, the rising economic headwinds in China, along with falling copper prices, also capped gains in the AUD/USD pair.

AUD/USD Supported by Stronger Jobs Report Despite Higher Unemployment Rate

On the AUD front, its rise is backed by a stronger domestic jobs report, suggesting the potential for another rate hike by the Reserve Bank of Australia (RBA). Although the mixed data hasn't significantly changed expectations for the RBA's next policy move, it has modestly boosted the Australian Dollar and supported the AUD/USD pair.

On the data front, the Australian Bureau of Statistics (ABS) released figures this Thursday indicating that the Unemployment Rate increased to 4.1% in June, slightly higher than both expectations and the previous 4.0% figure.

However, this disappointment was mitigated by a surprise uptick in the number of employed individuals, rising from 39.7K in May to 50.2K in June, well surpassing the anticipated 20.0K increase according to consensus estimates.

Therefore, the AUD/USD pair was modestly supported by a stronger jobs report despite a higher unemployment rate. The unexpected increase in employed individuals helped offset concerns, influencing the pair's stability.

Impact of Fed's Inflation Optimism and Rate Cut Speculation on USD and AUD/USD Pair

On the US economic front, the Federal Reserve has expressed optimism regarding inflation reaching its targets, which has led to speculation about potential interest rate cuts.

Fed Governor Christopher Waller and Richmond Fed President Thomas Barkin have noted a moderation in inflationary pressures, prompting market expectations for a 25-basis point rate cut in September to rise sharply to 93.5%, up from 69.7% previously.

Recent economic data shows that US Retail Sales for June held steady at $704.3 billion, meeting market expectations after a revised 0.3% increase in May.

Looking forward, upcoming reports are expected to show a rise in weekly jobless claims, alongside a moderate improvement in the Philadelphia Fed manufacturing index.

As a result, the Federal Reserve's positive outlook on inflation and potential rate cuts has bolstered the US dollar, exerting downward pressure on AUD/USD.

Market attention is now keenly fixed on upcoming US economic data releases, which are expected to sway the pair's trajectory amidst heightened speculation over rate cuts.

AUD/USD - Technical Analysis

The AUD/USD pair is trading at $0.67391, up 0.13%, reflecting a modest uptick amidst a broader market stability. The 4-hour chart reveals critical levels that traders should monitor. The pivot point is set at $0.6745, indicating a pivotal area for potential price action shifts.

Immediate resistance stands at $0.6760, followed by stronger resistance at $0.6778 and $0.6799. Conversely, immediate support is located at $0.6716, with further support levels at $0.6702 and $0.6685.

The Relative Strength Index (RSI) is at 48, suggesting a neutral market sentiment with neither overbought nor oversold conditions. This positioning implies potential for either upward or downward movements depending on forthcoming economic data and market reactions.

Additionally, the 50-day Exponential Moving Average (EMA) is positioned at $0.6750, slightly above the current price, indicating a need for a sustained move above this level to confirm a bullish trend.

For traders, a strategic entry point would be above $0.67168, aiming for a take profit level at $0.67595. Setting a stop loss at $0.66953 is advisable to mitigate potential downside risks. This approach leverages the modest bullish momentum while ensuring protection against unexpected market shifts.

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