AUD/USD Price Analysis – Sep 12, 2023

Daily Price Outlook

The AUD/USD currency pair failed to prolong its previous upward rally and declined during Tuesday's Asian session, moving away from the four-day high it reached around 0.6450 on Monday. However, this decline was mainly due to increased demand for the US dollar. It is worth noting that investors are betting that the Federal Reserve might raise interest rates again in 2023. This coupled with a cautious market sentiment is bolstering the US dollar. Furthermore, China's economic worries and disappointing Australian consumer confidence data are also exerting downward pressure on the Australian dollar and contributes to the AUD/USD pair.

US Dollar Rebounds, Puts Pressure on AUD/USD Pair

The broad-based US dollar has recovered after a recent drop and seems to have paused its retreat from a six-month high, which is putting pressure on the AUD/USD pair. However, This is mainly because the Federal Reserve is expected to continue tightening its monetary policy, which keeps US Treasury bond yields high and supports the USD. Furthermore, the risk-off mood in the market is making the Greenback more appealing as a safe-haven currency, adding to the strain on the riskier Australian Dollar.

Investors believe the Fed will maintain higher interest rates, with some even expecting another 25 bps increase by year-end. In the meantime, the positive US economic data and reports of officials leaning toward rate hikes contribute to concerns about rising borrowing costs and dampen attraction for riskier assets like AUD.

Challenges for AUD/USD Amid Poor Aussie Confidence Data

Moreover, the AUD/USD pair faced additional pressure due to disappointing Australian consumer confidence data. In September, the Westpac - Melbourne Institute Consumer Confidence Index plunged to a dismal 79.7. This index has remained below the 100 mark since March 2022, the longest such period since the early 1990s recession. This decline comes amid growing worries about China's worsening economic conditions, suggesting the Australian dollar could face more downside risks as a China-related currency.

Traders may choose to stay cautious as they await the upcoming US consumer inflation figures set to release on Wednesday. These numbers will likely impact market expectations regarding the Federal Reserve's future rate hikes, influencing demand for the US dollar and potentially driving the AUD/USD pair's direction.

AUD/USD - Technical Analysis

The AUD/USD pair remains steadfast, maintaining its position above the 0.6400 mark, thus reinforcing the prevailing bullish outlook. The next primary target in sight stands at 0.6545. The current negative trajectory of the Stochastic indicator may temporarily impede upward momentum.

However, we anticipate a shift towards a positive momentum that could bolster the pair towards the aforementioned targets. It's crucial to note that sustaining a position above 0.6400 is pivotal for the continuation of this bullish trajectory. For today, we forecast the pair to trade within a range, with support at 0.6390 and resistance capped at 0.6490.