AUD/USD Price Analysis – Oct 10, 2023

Daily Price Outlook

The AUD/USD currency pair has managed to sustain its upward momentum, maintaining a positive trajectory on the day. However, this strength can be attributed to several key factors. Firstly, Australia's exports have witnessed higher prices, contributing significantly to the Australian Dollar's robust performance. Furthermore, the ongoing geopolitical turmoil in the Middle East has provided further support to the AUD/USD currency pair.

Moreover, there has been a notable boost in consumer confidence among Australians in the month of October, further bolstering the strength of the Aussie dollar. Furthermore, the anticipation of a potential interest rate hike of 0.25% by Australia's central bank, the RBA, before the end of the year has also influenced the Australian Dollar's position in the market.

Recent Developments in Australia's Economy and Geopolitical Landscape

As per the latest data, Australia's inflation surged in August, primarily driven by higher oil prices, elevating the chances of the Reserve Bank of Australia (RBA) implementing interest rate hikes. Persistent Middle East tensions, with the potential to further propel oil prices, could exacerbate inflation Down Under, potentially prompting the RBA to raise rates by 0.25% to 4.35% by year-end.

Meanwhile, Australian consumer confidence, as indicated by Westpac Consumer Confidence data, rebounded in October with a 2.9% upturn following a slight dip of 1.5% in September. The Australian stock market is growing, propelled by surging commodity prices, particularly within the mining and oil sectors. Geopolitical tensions in the Middle East are fostering demand for commodities, thereby favoring the AUD/USD pair. Australia and Japan's efforts to ensure a stable energy supply fortify their strategic partnership. The RBA's potential rate hikes, spurred by persistent inflation surpassing the target, signify noteworthy economic shifts.

US Dollar and Treasury Yields Impact on Currency Markets

Despite strong US job data released on Friday, the US dollar failed to gain traction and still trading sluggish. This is because the US Treasury yields fell on Monday, as well as statements from Federal Reserve officials made investors less certain about future rate hikes, causing yields to drop further. This has weakened the dollar and helped the Aussie pair.

In September, the US added 336,000 jobs, beating expectations. However, wage growth was slightly lower than expected. The 10-year US Treasury bond yield fell to 4.64% on Monday. Dallas Fed President Lori Logan suggested that raising the Fed funds rate might not be as urgent, and Fed Vice Chair Philip Jefferson emphasized the need for caution in raising rates.

Looking ahead, traders will closely watch the US Core Producer Price Index (PPI) on Wednesday, followed by the FOMC Minutes and the Consumer Price Index (CPI) on Thursday. These events are crucial for understanding inflation and economic conditions in both the US and Australia.

AUD/USD - Technical Analysis

The AUD/USD pair is currently trading at 0.64087, reflecting its recent price dynamics. Analyzing the 4-hour chart, the pivot point is at 0.6373, serving as a significant reference point for traders and investors.

On the downside, immediate support can be found at 0.6299, with subsequent support levels at 0.6299 and 0.6212, indicating potential areas for reversals or continuations.

Turning to technical indicators, the Relative Strength Index (RSI) currently registers at 59.93, suggesting a relatively neutral sentiment. The MACD (Moving Average Convergence Divergence) exhibits a value of 0.00068, with the signal line at 0.00122, indicating minimal bullish momentum.

One observed chart pattern is the Tweezers top pattern near 0.6420, hinting at the possibility of a selling trend. Traders should keep a close eye on this pattern, as it may influence the pair's direction.

In conclusion, the overall trend for AUD/USD appears to be bearish, especially below the level of 0.64315. Traders should monitor this critical level for potential trading opportunities in the coming days. The short-term forecast suggests the possibility of testing resistance at 0.6458 and beyond.

Related News: