Technical Analysis

AUD/USD Price Analysis – Oct 29, 2024

By LonghornFX Technical Analysis
Oct 29, 20244 min
Audusd

Daily Price Outlook

During the European trading session, the AUD/USD currency pair continued its bearish trend, dropping to around 0.6575. This decline is largely driven by renewed buying interest in the US Dollar (USD), supported by expectations of a less aggressive approach from the Federal Reserve regarding policy easing.

On the other hand, there’s growing speculation about a possible interest rate cut by the Reserve Bank of Australia (RBA).

This speculation is partly due to anticipated consumer inflation data for Australia, set to be released on Wednesday. Analysts expect the annual inflation rate for the September quarter to drop to 2.9%, the lowest since March 2021.

These factors are putting pressure on the Australian Dollar (AUD), contributing to the selling tone surrounding the AUD/USD pair.

Moving ahead, investors seem cautious ahead of important US economic reports this week, including the Advance Q3 GDP, the Personal Consumption Expenditures (PCE) Price Index, and the Nonfarm Payrolls (NFP) report.

US Dollar Gains Momentum on Fed Expectations and Deficit Concerns

On the US front, the recent buying of the US Dollar (USD) is supported by expectations that the Federal Reserve (Fed) will take a less aggressive approach to policy easing.

However, the recent macroeconomic data suggests that the US economy is performing well, leading to increased market confidence that the Fed may implement smaller interest rate cuts throughout the year. This optimism is helping to strengthen the US dollar.

Moreover, the increasing concerns over spending plans proposed by Vice President Kamala Harris and Republican nominee Donald Trump are raising worries about a larger budget deficit.

This has contributed to higher US Treasury bond yields, which further supports the US Dollar. These factors are putting downward pressure on the AUD/USD pair, dragging it lower as traders respond to the stronger USD and ongoing economic developments.

Australian Dollar Faces Pressure Amid Inflation Expectations and Economic Developments

On the AUD front, there are growing expectations that Australia’s consumer inflation rate will come in at 2.9% for the September quarter, the lowest it has been since March 2021.

This has led to speculation about a possible interest rate cut by the Reserve Bank of Australia (RBA), which is putting additional pressure on the Australian Dollar (AUD) and dragging down the AUD/USD pair.

On the positive side, the AUD is getting some support from news that China plans to approve the issuance of over ¥10 trillion in extra debt to boost its economy, potentially starting as soon as next week.

Traders are now keeping an eye on upcoming US economic data, including the Consumer Confidence Index and the Job Openings and Labor Turnover Survey (JOLTS), which will influence market sentiment.

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

AUD/USD – Technical Analysis

The Australian Dollar (AUD/USD) has seen a pullback, currently trading at $0.65649, marking a 0.27% decline. This downward momentum places the pair below key support and moving averages, indicating a bearish outlook in the short term.

Immediate resistance is found at $0.66097, and breaking above this could trigger a mild recovery, potentially guiding prices toward the next resistance levels at $0.66895 and $0.67227.

The pivot point rests at $0.66544, offering a significant threshold that traders will monitor closely. AUD/USD remains below its 50-day EMA, positioned at $0.66527, underscoring the continued bearish pressure.

The Relative Strength Index (RSI) is low at 28, signaling oversold conditions, which may lead to some short-term buying interest. However, the broader trend suggests caution until the pair crosses above the immediate resistance levels.

On the downside, if selling pressure intensifies, the pair could test support at $0.65498, followed by deeper support at $0.65092 and $0.64730. Traders looking to enter long positions might find buying opportunities above $0.65499, with a potential take-profit target near $0.66097 and a stop-loss set at $0.65088 to manage downside risk.

While oversold conditions suggest a possible bounce, the AUD/USD pair’s position below the pivot and 50-day EMA warrants a cautious approach. A decisive move above $0.66097 is necessary to alleviate some bearish sentiment and signal a potential recovery.

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