Technical Analysis

AUD/USD Price Analysis – June 25, 2024

By LonghornFX Technical Analysis
Jun 25, 20244 min

Daily Price Outlook

During the European trading session, the AUD/USD currency pair failed to extend its upward rally and turned bearish, facing pressure around the 0.6643 level, with an intraday low matching that level. The downward trend was attributed to risk-off market sentiment, which undermined riskier assets like the Australian dollar, contributing to declines in the AUD/USD pair. Conversely, the bullish US dollar, supported by upbeat US economic data, also exerted pressure on the AUD/USD pair.

On the other hand, Australia's monthly CPI is estimated to have grown at a faster pace of 3.8% in May. This could support the AUD by limiting its losses, indicating stronger inflation that may help stabilize its value against other currencies.

Impact of Australian Inflation Expectations on the AUD/USD Pair

On the AUD front, the Australian Dollar is showing strength as investors await the upcoming monthly Consumer Price Index (CPI) data for May, due on Wednesday. Analysts predict Aussie inflation to rise to 3.8% from April's 3.6%. This anticipated increase suggests that the Reserve Bank of Australia (RBA) will likely keep interest rates unchanged for a longer period. Currently, financial markets are pricing in expectations that the RBA won't lower its Official Cash Rate throughout the year, buoying the outlook for the Australian Dollar amid these inflationary signals.

Therefore, the expected rise in Australian inflation could support the AUD against the USD, with markets anticipating the RBA to maintain interest rates, boosting the AUD/USD pair.

Impact of US Economic Factors on the AUD/USD Pair

On the US front, the broad-based US dollar regained strength following stronger-than-expected US PMI data and a surprisingly hawkish stance from the Federal Reserve. San Francisco Fed President Mary Daly emphasized the Fed's commitment to maintaining rates until inflation approaches 2%. However, she also highlighted the importance of supporting the labor market, suggesting potential rate cuts if unemployment rises. This dual approach to inflation and employment boosted market confidence in the dollar, which rebounded on positive economic indicators and the Fed's cautious yet vigilant stance on interest rates.

Investors are focused on upcoming speeches by Federal Reserve members Lisa Cook and Michelle Bowman for insights into future monetary policy. Key US economic releases this week, including the final Q1 GDP report on Thursday and the May PCE Price Index report on Friday, will impact market sentiment and financial markets.

The US dollar's strength, bolstered by upbeat economic data and a hawkish Fed stance, may pressure the AUD/USD pair if US indicators continue to exceed expectations, influencing market sentiment and potentially weakening the Australian dollar.

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

AUD/USD - Technical Analysis

The AUD/USD pair is trading at $0.66695, reflecting a modest increase of 0.10%. On the 4-hour chart, the pivot point is set at $0.67, a crucial level that could dictate the pair’s next move.

Immediate resistance levels are clustered closely at $0.6710, $0.6730, and $0.6750. These levels suggest potential upward targets if the price manages to break through the pivot point, indicating bullish momentum.

On the downside, immediate support is found at $0.6650, with further support at $0.6625 and $0.6600. These levels are critical for traders to monitor, as they indicate where the price might find stability if it begins to decline.

The Relative Strength Index (RSI) is currently at 60, suggesting a neutral market sentiment, slightly leaning towards the overbought territory. This could imply that the AUD/USD has some room to rise, but traders should be cautious of potential reversals.

The 50-day Exponential Moving Average (EMA) at $0.6700 serves as a significant resistance level. A break above this EMA would reinforce a bullish trend, supporting further gains. The overall technical outlook for AUD/USD remains cautiously optimistic above the pivot point of $0.67.

Given the current indicators, traders might consider an entry price for buying above $0.66585, aiming for a take profit at $0.66763, with a stop loss set at $0.66440. Maintaining a position above the pivot point could sustain the bullish bias, while a drop below this level may trigger a sharper selling trend.

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