Technical Analysis

AUD/USD Price Analysis – Nov 16, 2023

By LonghornFX Technical Analysis
Nov 16, 20234 min

Daily Price Outlook

Despite a strong surge in new job additions in the country, the AUD/USD currency failed to maintain its upward momentum. It experienced a loss of traction, dropping below the key psychological level of 0.6500 following the release of Australian Employment data. Notably, the seasonally adjusted Employment Change reported a significant increase of 55,000 in October, surpassing market expectations of 20,000 and the previous month's figure of 6,700. However, the majority of these new jobs were part-time positions, relatively diminishing the positive impact of the overall headline.

Economic Developments and Global Relations Impact on AUD/USD Pair

It's worth noting that Australia's Unemployment Rate remained steady at 3.7% in October, meeting expectations but showing a slight uptick from the previous figure of 3.6%. The AUD/USD pair experienced some fluctuations in the last session, influenced by economic data released from the United States. Additionally, in China, the House Price Index recorded a 0.38% drop in October, signaling a deteriorating situation in the country's property sector compared to the previous 0.1% decline.

In a positive development, a four-hour talk between US President Joe Biden and Chinese President Xi Jinping resulted in a commitment to stabilize their strained relationship and enhance military-to-military communications. This commitment indicates a shared effort to improve diplomatic and strategic cooperation in the future.

President Xi Jinping's reported comments underscore a hopeful partnership between China and the United States, emphasizing mutual respect, peaceful coexistence, and collaboration in various areas such as the economy, trade, agriculture, climate change, and artificial intelligence.

Therefore, the stable Australian Unemployment Rate and positive developments in US-China relations could potentially strengthen the AUD/USD pair. However, the decline in the Chinese House Price Index may introduce some uncertainty.

Impact of Unexpected US Economic Indicators on USD and Potential Influence on AUD/USD Pair

Furthermore, the US Producer Price Index (PPI) surprised everyone in October, unexpectedly dropping by 0.5%, contrary to the expected 0.1% increase. The annual rate also fell from 2.2% to 1.3%, echoing the softer inflation revealed in Tuesday's US Consumer Price Index (CPI) data.

Meanwhile, the report from the US Bureau of Labor Statistics indicated a more significant slowdown in US inflation than initially thought, resulting in a noticeable dip in the value of the US Dollar (USD). Adding to the economic picture, US Retail Sales defied predictions, only sliding by 0.1% in October instead of the expected 0.3% drop. Investors are now turning their attention to Thursday's weekly Jobless Claims.

Therefore, the unexpected decline in the US Producer Price Index (PPI), coupled with softer inflation, has weakened the US Dollar (USD). This could potentially boost the AUD/USD pair, as the Australian Dollar may gain strength against the weakened USD.

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

AUD/USD - Technical Analysis

The Australian Dollar's (AUD/USD) trading trajectory sees a slight dip, with the pair currently hovering around the 0.64713 mark, showcasing a minimal decline of 0.15%. This subtle movement occurs within the bounds of an established upward trend channel on the 4-hour chart, where the currency seems to be testing the resilience of its recent bullish momentum.

Key technical levels to consider are the immediate resistance positioned at 0.65208, followed by a more significant barrier at 0.65552. A breach of these levels could pave the way for a test of the next resistance at 0.66128. On the flip side, the currency pair finds support at 0.63956, with an additional safeguard at 0.63496, and should bearish pressures intensify, the next critical support lies at 0.63170.

The RSI indicator sits comfortably at 63.84, denoting a market that is neither overbought nor oversold, allowing for potential swings in either direction. Moreover, the pair's trading above the 50 EMA at 0.64292 suggests a continuing bullish stance in the near term.

In summary, the AUD/USD pair shows signs of steadiness within a bullish channel, yet traders remain vigilant for potential shifts influenced by broader market sentiment and upcoming economic data releases. The currency's immediate future appears to hinge on its capacity to sustain above the pivotal 50 EMA level and challenge the overhead resistance zones.

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