AUD/USD Price Analysis – Sep 26, 2023

Daily Price Outlook

Despite the US dollar's strong performance and concerns surrounding a property crisis in China, the AUD/USD currency pair managed to bounce back from near the 0.6400 level during the European session on Tuesday. It has reached a fresh daily high, trading around 0.6425, with a modest 0.10% gain for the day.

AUD/USD pair has remained within a familiar trading range for about two weeks. However, the US dollar's bullish trend, driven by the Federal Reserve's hawkish outlook, is limiting the pair's gains, while worries about the property crisis in China are holding back Australian dollar bulls from making fresh investments.

The US Dollar's Strength and Challenges for AUD/USD

The broad-based US dollar has been gaining momentum, hitting its highest level since December 2022. Although, the recent pause in its upward trend is offering some temporary relief to the AUD/USD currency pair. However, the overall strength of the US dollar is mainly due to the Federal Reserve's hawkish stance. Furthermore, the ongoing concerns about a property crisis in China are weighing down the Australian dollar and contributing to the AUD/USD pair losses.

Federal Reserve's Hawkish Stance and its Impact on AUD/USD

It is worth noting that Federal Reserve has maintained a hawkish stance, highlighting its commitment to keeping interest rates higher for an extended period. It anticipates at least one more rate hike this year, backed by influential FOMC members who stress the importance of higher borrowing costs in controlling inflation and reaching the 2% target.

Furthermore, the Fed is considering only two interest rate cuts in 2024, down from the previously projected four cuts. This policy shift is also pushing up yields on US Treasury bonds. Hence, these factors contribute to the continued strength of the US dollar and create challenges for the AUD/USD pair in achieving a significant recovery.

Looking forward, traders are anticipating upcoming US economic data releases, including the Consumer Confidence Index, New Home Sales, and the Richmond Manufacturing Index, which could provide fresh direction for currency pair.

AUD/USD - Technical Analysis

The AUD/USD currency pair currently hovers around the crucial 0.6400 support level, consistently maintaining above this threshold. Notably, the stochastic indicates pronounced positive momentum, enhancing the likelihood of a continued upward trajectory aiming for our primary anticipated target of 0.6545.

Given this backdrop, we remain optimistic about a bullish trend in the near future. However, it's imperative to note that any breach below the 0.6400 mark could curtail the anticipated ascent, pivoting the currency pair into a decline.

Today's forecasted trading range is anchored between support at 0.6380 and resistance at 0.6480.