AUD/USD Price Analysis – Nov 07, 2024
Daily Price Outlook
Despite a weaker-than-expected Australian Trade Balance for September, the AUD/USD currency pair continued its upward trend, staying strong around the 0.6632 level and reaching a daily high of 0.6639.
The Australian Dollar (AUD) outperformed its major peers, while the US Dollar (USD) faced a pullback after a rally sparked by Trump’s comments on Wednesday, ahead of the Federal Reserve’s (Fed) policy meeting at 19:00 GMT.
On the flip side, the US Dollar Index (DXY), which measures the USD against six major currencies, dropped from a four-month high of 105.30 to around 104.80. The Fed is widely expected to reduce interest rates by 25 basis points (bps), bringing them to a range of 4.50%-4.75%, according to the CME FedWatch tool.
AUD/USD Strengthened Amid RBA's Hawkish Stance and China Stimulus Expectations
On the AUD front, the Australian Dollar (AUD) bounced back strongly, despite a weaker-than-expected Australian Trade Balance for September. The Australian Dollar strengthened on the back of strong expectations regarding the Reserve Bank of Australia’s (RBA) hawkish stance on interest rates.
However, the RBA kept its Official Cash Rate (OCR) unchanged at 4.35% and highlighted the need for a strict policy to control inflation, driven by a strong labor market. This has given the AUD a boost.
On the data front, the Australian Trade Balance for September showed a surprising drop. The trade surplus fell to 4,609 million AUD from 5,284 million AUD in August, which was below economists' expectations of 5,300 million AUD. This was the lowest surplus since March, due to a decline in both exports and imports.
Despite this, the AUD continued to rise, supported by the possibility of China rolling out economic stimulus to boost its economy. The potential boost in Chinese investments and consumption, especially following US Republican Donald Trump’s presidential election victory, is positive for Australia as China is its main trading partner.
Therefore, the stronger Australian Dollar, driven by the RBA's hawkish stance and expectations of Chinese economic stimulus, supported the AUD/USD pair, despite a weaker-than-expected Trade Balance. This likely contributed to upward pressure on the AUD/USD pair, boosting its value.
AUD/USD – Technical Analysis
AUD/USD is showing strength, trading at $0.66208, following a rebound that lifted the pair above the crucial support level of $0.66235. The immediate resistance sits at $0.66612, and if breached, it could open the door to further gains towards $0.66849.
However, the pivot point at $0.66395 remains a critical level for traders, with the 50-day Exponential Moving Average (EMA) at $0.65940, suggesting underlying support.
Technical indicators present a mixed picture; the Relative Strength Index (RSI) is currently at 63, leaning towards overbought territory but not yet signaling a full reversal. This level indicates that buyers maintain control, though caution may be warranted as momentum could slow if resistance levels hold.
For bears, a drop below the immediate support of $0.65929 could shift the bias downward, potentially driving prices towards $0.65646 and then to the next support at $0.65471.
In the short term, the Australian dollar appears poised to extend its rally, though this optimism is fragile and reliant on maintaining levels above $0.66235. A close below the 50-day EMA at $0.65940 would signal a possible shift to bearish sentiment.
Given the current dynamics, traders may look to sell below $0.66260 with targets near $0.65933 while setting a stop loss at $0.66444.
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