Technical Analysis

AUD/USD Price Analysis – June 19, 2024

By LonghornFX Technical Analysis
Jun 19, 20244 min

Daily Price Outlook

During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well bid around the $0.6672 level, hitting an intraday high of $0.6676. The robust performance was mainly driven by a combination of factors, including concerns over the US economic recovery exacerbated by weaker-than-expected economic data such as the latest US Retail Sales figures. This has prompted market participants to revise down their expectations for US Federal Reserve interest rate hikes, thereby weakening the USD.

At the same time, the Reserve Bank of Australia (RBA) has kept its Official Cash Rate (OCR) unchanged at 4.35% for the fifth straight meeting, maintaining a confident stance. This decision surprised some analysts who expected a more cautious approach due to global economic uncertainties. The RBA's focus on monitoring inflation closely and its decision not to lower rates soon have boosted investor confidence in the AUD, supporting its recent upward trend.

Impact of Hawkish Messages from the RBA on AUD/USD

On the AUD front, the Reserve Bank of Australia (RBA) maintained its Official Cash Rate (OCR) at 4.35% in its June meeting, extending the longest period without change since 2022. This decision has postponed expectations for rate cuts, bolstering the Australian dollar. The RBA highlighted economic uncertainty and challenges in achieving target inflation levels, signaling a cautious stance. It emphasized vigilance against potential inflationary pressures, indicating a prolonged wait for stable inflation.

Thus, the RBA's hawkish hold suggests a conservative approach amidst economic uncertainties, influencing market expectations towards a potential easing cycle starting in 2025.

Therefore, this sentiment has boosted demand for the Australian Dollar, pushing the AUD/USD pair higher as traders recalibrate their expectations for future interest rate differentials between Australia and the United States.

Weaker-than-Expected US Retail Sales Data and its Impact on AUD/USD

On the US front, the recent release of weaker-than-expected US Retail Sales data has added further support to the AUD/USD pair's upward momentum. The Commerce Department reported a modest 0.1% month-on-month increase in May, falling short of the anticipated 0.2% rise. This disappointing economic indicator has raised concerns about the strength of consumer spending, a crucial driver of US economic growth.

Market participants interpreted the poor Retail Sales figures as a potential signal for softer economic activity in the US, which could prompt the Federal Reserve to adopt a more accommodative stance in its monetary policy. However ,the comments from Federal Reserve officials, including hints at possible rate cuts later in the year, have further dampened the USD's appeal, contributing to its depreciation against the AUD.

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

AUD/USD - Technical Analysis

The AUD/USD is currently trading at $0.66704, up 0.23%, as it navigates within a consolidation phase on the 4-hour chart. The pivot point is set at $0.6697, which is crucial for determining the next price movement.

Immediate resistance levels are identified at $0.6705, followed by $0.6729 and $0.6754. These resistance levels are key hurdles that need to be surpassed for a sustained bullish momentum.

On the downside, immediate support is seen at $0.6640, with further support at $0.6620 and $0.6586. These support levels are essential in preventing deeper declines and will be closely monitored by market participants.

The Relative Strength Index (RSI) is at 66, indicating that the pair is nearing overbought conditions, which could signal a potential reversal or consolidation in the near term. The 50-day Exponential Moving Average (EMA) is positioned at $0.6623, providing a significant support level and reinforcing the bullish outlook.

The overall outlook for AUD/USD remains cautiously bullish above the $0.6697 pivot point. A break above this level could trigger further buying interest, targeting the higher resistance levels mentioned.

Conversely, a drop below the immediate support at $0.6640 could lead to increased selling pressure and test lower support levels.

The recommended entry point is to buy above $0.66616, with a take profit target at $0.66965 and a stop loss at $0.66398.

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