Technical Analysis

AUD/USD Price Analysis – Oct 19, 2023

By LonghornFX Technical Analysis
Oct 19, 20234 min

Daily Price Outlook

The AUD/USD currency pair was unable to sustain its recent upward momentum and is currently experiencing losses against the US Dollar (USD) following the release of mixed employment data by the Australian Bureau of Statistics on Thursday. The AUD/USD pair had been performing well for two consecutive days, but this trend shifted after a speech by Reserve Bank of Australia (RBA) Governor Michele Bullock.

Furthermore, the US Dollar Index (DXY) is rebounding from its recent losses, primarily driven by higher US Treasury yields and robust economic data from the United States. The US Dollar is also being impacted by the situation in the Gaza Strip, as escalating tensions ensued following a rocket attack on a hospital. This development is viewed as another significant factor contributing to the downward pressure on the AUD/USD pair.

Australia's Economic Challenges and the Impact on the AUD/USD Currency Pair

It's important to note that Australia's job market experienced some unexpected changes in September. The number of jobs decreased unexpectedly, which came as a surprise. However, on a positive note, the Unemployment Rate provided a pleasant surprise by dropping more than anticipated, defying initial expectations. In September, Australia's Unemployment Rate pleasantly surprised at 3.6%, surpassing the projected 3.7% and matching the previous rate of 3.7%.

Furthermore, the Australian Weekly ANZ Roy Morgan Consumer Confidence survey indicates a decline in Australians' confidence levels. The reading plummeted from 80.1 to 76.4, and this shift in sentiment is evident across various aspects of life. The minutes from the RBA's October meeting also underscore their apprehensions regarding the potential for inflation to rise. Therefore, they are taking a cautious approach to any factors that could potentially contribute to rising inflation.

Hence, the unexpected job data and worries about inflation have exerted pressure on the Australian Dollar (AUD), leading to its depreciation against the US Dollar (USD) within the AUD/USD currency pair.

Developments Impacting the US Dollar and AUD/USD Currency Pair

In addition, the US Dollar Index (DXY) is recovering from its recent downturn, largely driven by increased US Treasury yields and robust economic indicators from the United States. Meanwhile, the US Dollar is also being influenced by the situation in the Gaza Strip, with escalating tensions following a rocket attack on a hospital.

It is worth noting that the US housing market is sending mixed signals. Building Permits in September exceeded expectations, indicating a positive outlook. On the other hand, Housing Starts rebounded but slightly below market consensus, adding complexity to the picture.

In terms of economic data, Retail Sales surpassed expectations, increasing by 0.7% in September. In the meantime, Industrial Production also improved by 0.3%. Therefore, the positive data has contributed to the strengthening of the US Dollar, which may exert downward pressure on the AUD/USD currency pair.

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

AUD/USD - Technical Analysis

In the realm of forex trading, the AUD/USD pairing holds significant weight. A key indicator of the economic ties between two major economies, this pair is susceptible to various macroeconomic indicators and geopolitical developments. Today's forecast aims to shed light on its possible trajectory based on available technical data.

The AUD/USD stands at 0.63061, marking a decline of 0.53% in the past 24 hours. Pivot points, essential for day trading, places the pair at 0.6341. Resistance levels unfold at 0.6393, followed by 0.6433, and then 0.6467. On the flip side, immediate support lies at 0.6289, with subsequent levels at 0.6252 and 0.6215 respectively.

The RSI (Relative Strength Index) is at 37, suggesting that the pair is nearing oversold conditions. A dip below 30 might trigger potential buying interest, while its current position under 50 emphasizes bearish sentiments. The MACD line has slid below the signal line, thereby advocating for a bearish momentum in the near term.

The 50 EMA (50-Day Exponential Moving Average) is recorded at 0.6354. The pair’s current position below this mark intensifies the bearish sentiment. Generally, when price sustains below the 50 EMA, it’s an indicator of a short-term downward trend.

The pair's bearish momentum is evident, especially if it remains below the 0.63414 mark. Conversely, crossing this threshold could usher in some bullish momentum. In the immediate future, given the bearish indicators and the current global economic environment, the AUD/USD might edge towards the support at 0.6252.

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