AUD/USD Price Analysis – Sep 17, 2024
Daily Price Outlook
The AUD/USD pair extended its gains for the second consecutive day on Tuesday, reaching a one-and-a-half-week high of around 0.6758 during the European session. This marks the fourth straight day of positive movement for the pair. Investors are now focusing on the Federal Open Market Committee (FOMC) meeting scheduled for Wednesday to gauge future direction.
Meanwhile, the US dollar has been consolidating its recent losses, falling to its lowest level since July 2023, partly due to speculation of a substantial 50 basis point rate cut by the Federal Reserve.
Concurrently, the Reserve Bank of Australia's (RBA) hawkish stance and a generally positive sentiment in equity markets are bolstering the Australian dollar. These factors are supporting the AUD/USD pair, showcasing the Aussie’s strength amidst evolving market conditions.
Impact of US Dollar Weakness and Chinese Economic Concerns on AUD/USD Pair
On the US front, the Dollar has been struggling, remaining near its yearly low and contributing to caution among traders. The Federal Reserve’s anticipated significant rate cut has influenced this weakness. According to the CME Group’s FedWatch Tool, there's now over a 60% chance that the Fed will cut rates by 50 basis points on Wednesday.
This expectation has pushed the yield on 2-year US government bonds to its lowest level since September 2022, while the 10-year Treasury yield has weakened to levels not seen since June 2023.
Despite stronger-than-expected data from the New York Empire State Manufacturing Index for September, the Dollar has struggled to gain support. Additionally, weak economic reports from China over the weekend point to ongoing challenges in reaching its 5% GDP growth target for 2024.
This economic uncertainty affects the Australian Dollar, which is sensitive to China’s economic performance. Traders are cautious, waiting for the Fed’s decision on Wednesday and further guidance on future rate cuts, which will be crucial in shaping market expectations.
The uncertainty surrounding the US Dollar and weaker economic reports from China contribute to caution in the AUD/USD pair. Traders are closely watching the Fed's decision on rate cuts, which could influence the pair’s direction based on shifting expectations.
AUD/USD - Technical Analysis
The Australian dollar (AUD/USD) is trading at $0.67478, down 0.13% for the day, as the pair continues to consolidate just above its pivot point of $0.6734.
The 4-hour chart shows a steady upward trend, although the pair has recently encountered minor selling pressure. The immediate resistance at $0.6767 is the key level for bulls to watch.
A break above this could open the door to further upside, with the next resistance levels at $0.6793 and $0.6816, where buyers may face greater opposition.
On the downside, immediate support sits at $0.6698, where the 50-day EMA aligns, providing a solid floor for the pair. If prices break below this level, the next support levels lie at $0.6667 and $0.6635, suggesting potential for a deeper pullback.
The RSI is currently at 64, indicating mild bullish momentum, but edging closer to overbought territory. This suggests that while the trend remains positive, there may be a short-term pause before the next significant move.
A break above $0.67336 offers a potential buying opportunity, with targets around $0.67832. Traders should maintain a stop loss near $0.66962 to manage risk in case of a reversal.
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