AUD/USD Price Analysis – Sep 19, 2023

Daily Price Outlook

During the Asian trading session on Tuesday, the AUD/USD currency pair struggled to gain momentum and remained sluggish around the 0.6430 mark. However, this lack of movement was attributed to investor caution ahead of the US Federal Reserve's policy decision. Furthermore, the release of the minutes from the Reserve Bank of Australia's (RBA) September meeting did not provide any clear direction to the traders. Consequently, traders prefered for a cautious approach and decided to wait and observe the coming decisions of the Federal Open Market Committee (FOMC). At the time of writing, the AUD/USD currency pair is trading at 0.6452 and consolidating in the range between 0.6428 - 0.6460.

RBA's September Meeting and Impact on AUD/USD

The Reserve Bank of Australia (RBA) has shared information from its September meeting, giving us a better understanding of its monetary policy decisions. During this meeting, the RBA discussed the possibility of a 0.25% increase in interest rates. However, after a careful examination of the latest economic data, they ultimately decided to keep interest rates unchanged. In the meantime, the released minutes reveal a cautious approach, suggesting that if persistent high inflation remains a concern, they may consider raising rates in the future. Nevertheless, the minutes from the meeting did not provide any clear indications of a coming rate hike. Therefore, this lack of clarity will likely have a negative impact on the Australian Dollar (AUD) against the US Dollar (USD) in the short term.

US Fed's Monetary Policy and Its Impact on AUD/USD

Across the ocean, the US Federal Reserve is expected to keep interest rates unchanged in September, which makes the US Dollar weaker. However, investors are being careful because they believe the Fed might raise rates by 0.25% by the end of 2023. This is because the US economy is doing well, and prices keep rising.

As in result, the broad-based US dollar, measured by the US Dollar Index (DXY), has halted its two-day decline and is now trading around 105.20. It's slightly below the six-month high reached last week. Meanwhile, US Treasury yields, specifically the 10-year bond, have bounced back to 4.31%, which could help support the dollar. Hence, the potential rate hike in 2023 may lead to a stronger US Dollar. This could put downward pressure on the AUD/USD currency pair, making the Australian Dollar weaker against the USD.

Looking forward, investors will keep thier eyes on upcoming US macro data, particularly Building Permits and Housing Starts for August. These numbers will likely give insights into the strength of the US economy and influence trading decisions for the AUD/USD pair.

AUD/USD - Technical Analysis

The AUD/USD pair is currently evaluating the support of its intraday bullish channel and maintaining its position above this line, indicating potential upward movement towards our anticipated target of 0.6345. This outlook is bolstered by the positive indicators from the stochastic oscillator.

The EMA50 underpins the price, adding further weight to the anticipated uptrend. This bullish perspective will hold unless the price breaks the 0.6400 level and sustains below it at the daily close. Today, we anticipate the trading range to span between a support level of 0.6390 and a resistance point of 0.6490.