AUD/USD Price Analysis – Oct 24, 2023

Daily Price Outlook

gains for the second consecutive day. However, the bearish US dollar, pressured by the lower US Treasury yields, was seen as one of the key factor that kept the AUD/USD currency pair higher. Furthermore the risk-on market sentiment, backed by the easing tension in the Middle east, was seen as a another key factor that boosted the AUD/USD currency pair.

Australia's Economic Challenges and the Impact on AUDUSD

According to the latest update, Australia's initial S&P Global Manufacturing and Services PMI for October indicates a minor slowdown. This suggests that both the manufacturing and services sectors may not be performing as robustly as expected. Financial markets are speculating that the Reserve Bank of Australia (RBA) could consider adopting a more stringent monetary policy. RBA Governor Michele Bullock has mentioned that if inflation remains persistently higher than their projections, the RBA stands ready to take necessary measures to address the situation.

According to the latest data released on Tuesday, the preliminary figures for Australia's services sector in October, as measured by the S&P Global Australian Services PMI, declined from 51.8 in September to 47.6. Likewise, the Manufacturing PMI saw a slight drop from 48.7 in the previous report to 48.0 this time. Furthermore, the Composite Index, which combines both of these indicators, registered a reading of 47.3, down from 51.5 in the prior report. These numbers indicate the possibility of economic challenges ahead for Australia.

Hence, the reports of a slowdown in Australia's economic indicators, including the Services and Manufacturing PMI, could exert downward pressure on the AUD/USD currency pair.

Impact of Recent Economic Developments on the AUDUSD Currency Pair

It's worth noting that the United States and China recently held their inaugural official meeting on economic matters, known as the Economic Working Group. In this forum, they engage in discussions concerning economic policies and various related issues. The U.S. Treasury Department has stated that the two nations had a productive and substantial conversation regarding the state of their domestic and global economies.

In China, there are reports indicating that they are considering permitting an additional 1 trillion yuan in government borrowing to stimulate their economy. They plan to use this money to invest more in constructing infrastructure such as roads and bridges to jumpstart economic growth. The decision-makers, known as the standing committee of the National People's Congress (NPC), are expected to approve this extra debt on the final day of their meeting.

The US Dollar Index, which gauges the dollar's value in comparison to other currencies, appears to be on a downward trend for the fourth consecutive day. This could be attributed to the recent decline in US Treasury yields, which had previously reached their highest level since 2007. When yields decrease, it can make the US dollar less appealing to investors.

Hence, the positive outcome of economic discussions between the US and China, as well as China's intentions for increased infrastructure spending, may have a positive impact on the AUD/USD pair. Further, the weakening US Dollar Index could further bolster the Australian dollar.

As we approach the close of October 24, the AUD/USD pair offers a compelling narrative for investors and traders. Currently priced at 0.63572, the Australian Dollar has experienced an uplift of 0.33% against the US Dollar over the last 24 hours. The 4-hour (4H) chart, revered by many for its equilibrium between short-term volatility and overarching trend identification, elucidates several pivotal factors.

The heart of our examination revolves around the Pivot Point, stationed at 0.6336. From this fulcrum, the AUD/USD showcases a multi-tiered resistance structure: The immediate resistance awaits at 0.6373, followed closely by 0.6432, and then 0.6470. In the face of downward pressures, support for the pair lies at 0.6274, with subsequent bastions at 0.6236 and 0.6178.

Delving into our technical indicators, the RSI, or Relative Strength Index, registers at 58. Historically, any reading surpassing 70 signifies overbought conditions, while figures below 30 indicate oversold territories. Given the RSI's positioning above 50, we discern a prevailing bullish sentiment.

In the realm of momentum, our MACD metrics are of particular note. The MACD reads 0.0006, juxtaposed against its Signal line at 0.0002. Conventionally, a MACD line breaching above its Signal counterpart heralds positive momentum, and our current setup confirms this upward trajectory.

The 50-Day Exponential Moving Average (EMA) sits at 0.6340. With the AUD/USD pair's price eclipsing this average, it's indicative of a short-term bullish trend.

In terms of chart patterns, while the 4H chart can host a myriad of configurations, no dominant patterns such as Symmetrical Triangles or upward channels are apparent currently. However, the dynamic nature of financial charts necessitates regular monitoring for emergent patterns.

Conclusion:

In summation, the overarching trend for AUD/USD is bullish, especially if it remains anchored above the 0.6336 threshold. In the ensuing trading sessions, given the pair's technical posture, we anticipate AUD/USD to challenge the immediate resistance mark of 0.6373.

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