Technical Analysis

AUD/USD Price Analysis – Nov 28, 2023

By LonghornFX Technical Analysis
Nov 28, 20234 min

Daily Price Outlook

Despite downbeat Retail Sales data from the country, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6625 level. However, the reason for its upward momentum could be attributed to the bearish US dollar, which marked its lowest point since late August on Tuesday. The prevailing trend continues to lean towards the downside, fueled by a dip in US Treasury yields, notably with the 2 and 10-year bond yields slipping to 4.86% and 4.39%, respectively.

Another factor supporting the AUD/USD currency pair could be the National Australia Bank (NAB), which anticipates another RBA rate hike and expects it to occur at the February 2024 meeting.

Australian Dollar (AUD) Resilience Amid Consumer Spending Dip and RBA Caution

It's worth noting that Australia's consumer spending, a key measure by the Australian Bureau of Statistics, fell 0.2% in October, contrary to the expected 0.1% rise. Despite this, the Australian Dollar gained strength due to positive market sentiment and the announcement of a Chinese stimulus plan.

Meanwhile, Australia's Reserve Bank Governor Michele Bullock highlighted that the current monetary policy is restrictive. She's cautious about raising interest rates too much because it might reduce demand and impact jobs, especially with ongoing services inflation.

Thereby, the minutes from the RBA's meeting revealed a "credible case" against an immediate rate hike, although there is thinking of tightening in response to escalating inflation risks. National Australia Bank (NAB) foresees a potential RBA rate hike, possibly in February 2024.

Governor Bullock expects inflation to decrease to just under 3.0% in 2025 but acknowledges uncertainty. Traders are awaiting Wednesday's Monthly Consumer Price Index (YoY) for more insights.

FOMC Minutes, US Economic Data, and Potential Impacts on AUD/USD Pair

Moreover, the latest Federal Open Market Committee (FOMC) meeting minutes indicated that if there isn't sufficient progress toward the inflation goal, they might contemplate tightening monetary policy. All FOMC members unanimously agree to maintain a relatively tight policy until there is clear evidence of inflation aligning with their target.

In other news, US New Home Sales dropped by 5.6% to 679K, missing the expected 725K.

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On Tuesday, the US Dollar Index (DXY) reached its lowest level since late August, propelled by a decrease in US Treasury yields, with 2 and 10-year bond yields slipping to 4.86% and 4.39%. Consequently, the AUD/USD pair might experience a positive influence as the USD weakens, attributed to the Federal Open Market Committee's (FOMC) cautious approach to tightening policy.

Furthermore, the prospect of a weaker USD may be exacerbated by disappointing US New Home Sales, thereby favoring the Australian Dollar.

In the upcoming week, the US is scheduled to release key data, notably the Housing Price Index and CB Consumer Confidence on Tuesday. Furthermore, speeches from Federal Reserve (Fed) officials are expected to offer insights into the central bank's perspective on the economy.

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

AUD/USD - Technical Analysis

In the realm of foreign exchange, the Australian Dollar (AUD) against the US Dollar (USD) presents an intriguing narrative of resilience and growth. As of today, the AUD/USD pair is trading around 0.66, marking a modest rise of 0.14% in the last 24 hours. This movement signifies a cautious but positive sentiment in the market towards the Australian currency.

The technical landscape for AUD/USD is defined by several key price levels. The current pivot point stands at 0.6648, a critical level for determining its immediate directional bias. The pair faces immediate resistance at 0.6707, followed by higher levels at 0.6765 and 0.6824. These resistance levels will play a significant role in deciding whether the AUD can extend its upward trajectory against the USD. On the flip side, support levels are noted at 0.6618, with additional supports at 0.6558 and 0.6528, crucial for cushioning any potential declines.

From a technical indicators perspective, the Relative Strength Index (RSI) for AUD/USD is at 67, hovering near the overbought threshold but still indicative of a bullish sentiment. This suggests that the pair may still have room for further upward movement. Additionally, the 50-Day Exponential Moving Average (EMA) is at 0.6600. The AUD/USD trading above this level reinforces the notion of a short-term bullish trend.

In conclusion, the overall trend for the AUD/USD pair appears bullish, particularly if it maintains above the 0.65872 level. The short-term outlook suggests that the pair might test higher resistance levels in the coming days. Investors and traders should closely monitor these levels, as breaking through either resistance or support could signal significant price movements for the Australian Dollar against its American counterpart.

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