Technical Analysis

AUD/USD Price Analysis – Nov 14, 2023

By LonghornFX Technical Analysis
Nov 14, 20234 min

Daily Price Outlook

During the early European trading on Tuesday, the AUD/USD currency pair failed to stop its downward rally and lost some of its traction around 0.6375, marking a 0.07% decrease for the day. Traders seems cautious to place any strong position as they await the release of the US Consumer Price Index (CPI) later today, providing insights into whether inflation is nearing the targeted 2%.

Nevertheless, the downward trend in the AUD/USD pair could be short-lived as the bearish US dollar may help the AUD/USD pair to limit its deeper losses. Notably, the US Dollar Index (DXY), which gauges the USD's value against other currencies, is losing its traction and currently stands at 105.65. However, the bearish trend in the US dollar was driven by the declines in the US Treasury bond yields, with the 10-year yield at 4.63% and the 2-year yield at 5.03%.

Key Economic Indicators and Fiscal Update in the US

It's worth noting that the New York Fed's survey on consumer expectations revealed a slight easing in the 1-year and 5-year inflation outlooks, settling at 3.57% and 2.72%, respectively. In October, the US government reported a $66 billion budget deficit, an improvement from the $87 billion deficit last year. Tuesday's focus will be on US inflation data, with the Consumer Price Index (CPI) expected to grow by 0.1%. Core inflation is estimated to stay at 4.1%. These numbers might influence the Federal Reserve's decision on additional tightening, aligning with the data-backed views of the Federal Open Market Committee (FOMC).

Therefore, the AUD/USD pair may rebound due to a slight easing in US inflation expectations and a lower budget deficit, alleviating pressure on the US dollar and favoring the Australian dollar.

Economic Insights and Upcoming Events in Australia and the US

Moreover, Reserve Bank of Australia (RBA) Assistant Governor Marion Kohler mentioned that the decrease in inflation is expected to happen more gradually than initially anticipated. This is attributed to the ongoing strong domestic demand and persistent pressures on labor and other costs. Kohler emphasized the need for a more restrictive policy to address high inflation. The market is predicting that the RBA will likely raise interest rates again in the first half of next year in response to these economic conditions.

Moving forward, market investors will closely monitor Australia's Westpac Consumer Confidence and the National Australia Bank's Business surveys. Meanwhile, the US Consumer Price Index (CPI) data is scheduled for Tuesday. Looking further into the week, the Australian Q3 Wage Price Index is set for Wednesday, followed by the Australian employment report on Thursday.

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

AUD/USD - Technical Analysis

The Australian Dollar exhibits a tentative stance against the U.S. Dollar, trading narrowly around $0.6373 as market participants weigh global economic cues. The AUD/USD pair's cautious movement is mirrored by its proximity to the 50-day Exponential Moving Average (EMA) at $0.63943, suggesting a pivotal juncture that could prompt a directional breakout.

From a technical viewpoint, the Relative Strength Index (RSI) sits at 36.94, bordering the oversold territory, which may indicate a potential for upside correction if the market sentiment shifts. Key resistance levels are mapped out at $0.6439 and $0.64705, with each acting as a gatekeeper to further bullish advances, potentially up to the $0.65208 mark.

Conversely, immediate support lingers at $0.63159, and if breached, the Aussie may witness a slide towards $0.62864, with a firmer base at $0.62684. The currency's short-term outlook hinges on the impending economic reports, particularly the U.S. Consumer Price Index (CPI), which holds the capacity to sway the interest rate trajectory and thus influence the AUD/USD trend.

In summary, the AUD/USD's trajectory is delicately balanced, with traders keenly awaiting economic indicators to provide clear directional impetus. The anticipation surrounding the U.S. CPI data underscores the fragile state of the current forex landscape, where pivotal reports can have an amplified impact on currency valuations.

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