AUD/USD Price Analysis – June 20, 2024

Daily Price Outlook

During the European trading session, the AUD/USD currency pair maintained its upward rally and remained well bid around the 0.6541 level, hitting an intraday high of 0.6680. The upward trend can be attributed to the risk-on market sentiment, which supports riskier assets such as the Australian dollar. Meanwhile, the Reserve Bank of Australia (RBA) took a hawkish stance at its June meeting on Tuesday, which further bolstered the AUD/USD pair. Conversely, the US dollar weakened due to increased expectations of a Fed rate cut, which weighed on the Greenback and contributed to the gains in the AUD/USD pair.

Impact of RBA's Hawkish Stance on AUD/USD Outlook

On the AUD front, the Australian Dollar is gaining ground because the Reserve Bank of Australia (RBA) maintained a hawkish stance at its June meeting. Despite acknowledging economic uncertainties and challenges in achieving inflation targets, the RBA's decision to keep the cash rate unchanged at 4.35% hinted at a cautious optimism.

Governor Michele Bullock emphasized a readiness to take necessary actions to stabilize inflation. Traders are eyeing the upcoming Australian Judo Bank Manufacturing PMI for June, expected to improve to 50.6, which could influence future RBA decisions and potentially support the Australian dollar against the USD.

Therefore, the hawkish RBA stance and potential economic recovery indicated by the PMI could bolster the AUD/USD pair amid expectations of delayed rate cuts and improved sentiment towards the Australian dollar.

Impact of US Economic Indicators on AUD/USD Pair

On the US front, the broad-based US dollar lost some of its gains due to earlier expectations and speculation of Federal Reserve interest rate cuts. This shift was influenced by weaker Retail Sales data and concerns about economic slowdown, which have tempered market optimism. Meanwhile, the Fed's revised projection of only one rate cut this year, down from earlier expectations of three, could help the US dollar limit its losses. This adjustment has stabilized Treasury yields and restored some investor confidence, countering earlier concerns about economic slowdown and reducing downward pressure on the dollar.

Therefore, the US dollar's mild bearish bias, driven by reduced rate cut expectations and stabilized Treasury yields, ease downward pressure on the AUD/USD pair amid improved investor sentiment towards the dollar.

Looking ahead, investors will focus on several key economic indicators and events in the United States. These include the release of weekly Initial Jobless Claims, Building Permits, Housing Starts, the Philly Fed Manufacturing Index, and a speech by Fed official Neel Kashkari on Thursday. Additionally, on Friday, attention will turn to the preliminary US S&P Global PMI reports for June.

AUD/USD - Technical Analysis

The AUD/USD pair is currently trading at $0.66716, showing a slight decline of 0.08%. The 4-hour chart highlights key technical levels that are crucial for traders. The pivot point at $0.6675 is a significant marker for determining the next direction of price movement. Immediate resistance is seen at $0.6690, with further resistance levels at $0.6704 and $0.6719. These resistance points are essential barriers that could cap any potential upward movement.

On the support side, immediate support is located at $0.6654, followed by stronger support levels at $0.6641 and $0.6630. These support levels are vital in preventing further declines in the AUD/USD pair.

Technical Indicators:

The bearish outlook is supported by the current price action, which is below the pivot point of $0.6675. Market sentiment remains cautious, influenced by global economic factors and domestic data releases that impact the Australian dollar.

Conclusion:

For traders looking to capitalize on the current bearish trend, an entry price below $0.66745 is recommended. The take profit level is set at $0.66484, with a stop loss at $0.66897 to manage potential risks.

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