AUD/USD Price Analysis – July 30, 2024

Daily Price Outlook

During the European trading session, the AUD/USD currency pair maintained its upward momentum and remained well-bid around the 0.6542 level, hitting an intraday high of 0.6562.

This upward movement can be attributed to several factors, including the hawkish sentiment surrounding the RBA's policy decision and a bearish US Dollar, which lose ground due to increased odds of a Fed rate cut in September.

Impact of Australian Economic Data and RBA Forecasts on AUD/USD Pair

On the AUD front, the Australian Dollar edged higher against the US Dollar following Tuesday's Building Permits data release.

Australia's Consumer Price Index (CPI) data, set for release on Wednesday, could offer clues about the Reserve Bank of Australia’s (RBA) future monetary policy. Analysts expect a slight rise in headline inflation for Q2, with the core rate remaining steady.

This inflation report will influence the RBA’s rate hike decision next week, although economists warn that higher rates might risk Australia’s economic recovery. Meanwhile, the Australian Prudential Regulation Authority (APRA) noted rising arrears rates but will keep current macroprudential policies unchanged.

On the data front, Australia's Building Permits fell by 6.5% in June, more than the expected 3.0% drop, following a 5.7% rise in May. Year-over-year, Building Permits declined by 3.7%, better than last year's 8.5% decrease.

National Australia Bank (NAB) forecasts the Reserve Bank of Australia's (RBA) cash rate will stay at 4.35% until May 2025. The NAB Economics team predicts the rate will drop to 3.6% by December 2025, with further declines expected in 2026.

Therefore, the AUD/USD currency pair could be influenced by Australia's mixed Building Permits data and inflation expectations, along with NAB's forecast of stable RBA rates until 2025. Market sentiment may fluctuate based on the upcoming CPI data and the RBA's rate decisions.

Impact of US Rate Cuts and Inflation Data on AUD/USD Pair

On the US front, the US Dollar could face challenges due to rising expectations of a Federal Reserve (Fed) interest rate cut in September. Meanwhile, the cooling inflation and easing labor market conditions have fueled expectations of three rate cuts this year. The Fed's Interest Rate Decision on Wednesday will be crucial.

Bank of America (BofA) suggests that strong US economic growth allows the Federal Open Market Committee (FOMC) to "afford to wait" before making changes, with the economy remaining robust. BofA expects the Fed to start cutting rates in December.

On the data front, the US Personal Consumption Expenditures (PCE) Price Index rose by 2.5% year-over-year in June, slightly down from 2.6% in May and meeting market expectations.

Monthly, the PCE Index increased by 0.1% after no change in May. Core PCE inflation, excluding food and energy, also climbed to 2.6% in June, matching May's increase and surpassing the 2.5% forecast. Month-over-month, the core PCE Index rose by 0.2% in June, up from 0.1% in May.

Therefore, the US rate cuts and cooling inflation could weaken the US Dollar, potentially benefiting the Australian Dollar. This shift might support the AUD/USD pair as market expectations influence currency movements.

AUD/USD - Technical Analysis

AUD/USD is trading at $0.65535, reflecting a slight uptick of 0.05% during the early trading hours. The pivot point stands at $0.6595, serving as a critical indicator for market direction.

Immediate resistance is identified at $0.6579, with subsequent resistance levels at $0.6620 and $0.6653. On the downside, immediate support is observed at $0.6514, followed by stronger supports at $0.6489 and $0.6459.

The Relative Strength Index (RSI) is currently at 42, indicating a slightly bearish sentiment but not yet in oversold territory. This suggests that while the market leans towards selling, there remains potential for upward corrections.

The 50-day Exponential Moving Average (EMA) is positioned at $0.6612, above the current price. The proximity to this EMA highlights a significant resistance level; a move above this could signal a shift towards bullish momentum, whereas failure to breach it might reinforce the prevailing bearish trends.

Given the current technical setup, a strategic entry point for traders is recommended above $0.65356, targeting a take profit level of $0.65949. Setting a stop loss at $0.65045 is advised to manage potential downside risks effectively.

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