AUD/USD Price Analysis – May 2, 2024
Daily Price Outlook
Despite the weaker-than-expected Trade Balance and Building Permits data, the AUD/USD currency pair maintained its upward rally and remained well bid around the 0.6541 level, hitting the intraday high of 0.6550 level.
However, the reason for its upward trend can be associated with the risk-on market sentiment, which tends to underpin riskier assets like the Australian dollar.
Moreover, the hawkish sentiment surrounding the Reserve Bank of Australia’s (RBA) maintaining higher interest rates was seen as another key factor that kept the AUD/USD pair higher.
On the other side, the US dollar lost some traction following dovish remarks from Federal Reserve Chairman Jerome Powell. Powell dismissed the likelihood of a further rate hike, contributing to pressure on the US dollar and further boosting the AUD/USD currency pair.
Impact of RBA's Hawkish Stance and Economic Data on AUD/USD Pair
On the AUD front, the Australian Dollar is gaining ground because the Reserve Bank of Australia (RBA) is showing a hawkish attitude, meaning they're inclined to keep interest rates high in 2024. Recent domestic inflation data exceeding expectations has fueled speculation that the RBA might delay any rate cuts. ANZ predicts the RBA could begin reducing rates in November due to the inflation data.
On the data front, Australia's Trade Balance in April showed a surplus of 5,024 million, below the expected increase to 7,370 million from the previous 7,370 million. Building Permits also fell short, rising by 1.9% in March instead of the expected 3.0%. February's reading was -1.9%, indicating a slight improvement in construction activity.
Therefore, the hawkish stance of the RBA, fueled by strong inflation data, supports the AUD. However, weaker-than-expected trade balance and building permits data may slightly dampen the AUD/USD pair's momentum.
Impact of US Federal Reserve's Dovish Stance and Economic Data on AUD/USD Pair
On the US front, the US dollar is facing pressure after Federal Reserve Chairman Jerome Powell's comments following Wednesday's interest rate decision. Powell indicated that there's little chance of another rate hike, adding to the USD's downward pressure. As anticipated, the US Federal Reserve (Fed) chose to keep interest rates steady at 5.25%-5.50% in May.
Powell also noted a slowdown in progress on inflation, suggesting it will take longer than expected for inflation to reach the Fed's 2% target. He mentioned that if strong job growth continues but inflation remains low, it would justify delaying rate hikes.
On the data front, the ADP US Employment Change showed that private businesses added 192,000 workers to their payrolls in April, exceeding the expected increase of 175,000 and the previous month's 208,000.
However, the ISM US Manufacturing PMI dropped to 49.2 in April from March's 50.3, contrary to expectations of remaining steady. This indicates a contraction in the US manufacturing sector, failing to maintain the growth observed in the previous month, which marked the first expansion in 16 months.
Therefore, the dovish stance of the US Federal Reserve and mixed economic data from the US, with strong job growth but a contraction in manufacturing, could support the AUD/USD pair's upward movement.
AUD/USD - Technical Analysis
The Australian Dollar (AUD) against the US Dollar (USD) shows a modest uptick in today's trading session, with a price increase to $0.65449, marking a rise of 0.29%. This positive movement highlights a rebound from previous sessions and positions the currency pair near critical technical levels.
The pivot point for today is set at $0.65167, serving as a baseline for intraday fluctuations. Resistance levels for the AUD/USD are identified at $0.65806, $0.66292, and $0.66878. These are key thresholds where the currency pair might face selling pressure.
On the downside, immediate support lies at $0.64669. Further support levels are established at $0.64110 and $0.63642, which could stabilize price drops.
Technical indicators provide additional insights; the Relative Strength Index (RSI) is currently at 60, indicating a slight tilt towards overbought conditions but still within a normal range. The 50-day Exponential Moving Average (EMA) at $0.65047 supports the bullish sentiment, as it lies below the current price, suggesting an upward trend.
Given these observations, a strategic approach for traders would be to look for entry opportunities above the pivot point. Specifically, initiating a buy above $0.65154 could be prudent, with a take profit target at $0.65811 and a stop loss set at $0.64785 to manage risks effectively.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Price Movement Insight: AUD/USD is up by 0.29%, trading at $0.65449, indicating a positive shift in market sentiment.
- Critical Trading Levels: The currency faces immediate resistance at $0.65806, with further barriers at $0.66292 and $0.66878; support begins at $0.64669.
- Technical Indicators and Strategy: RSI near 60 suggests a mildly bullish outlook; buying above $0.65154 with targets at $0.65811 is recommended.
The Australian Dollar (AUD) against the US Dollar (USD) shows a modest uptick in today's trading session, with a price increase to $0.65449, marking a rise of 0.29%. This positive movement highlights a rebound from previous sessions and positions the currency pair near critical technical levels.
The pivot point for today is set at $0.65167, serving as a baseline for intraday fluctuations. Resistance levels for the AUD/USD are identified at $0.65806, $0.66292, and $0.66878.
These are key thresholds where the currency pair might face selling pressure. On the downside, immediate support lies at $0.64669. Further support levels are established at $0.64110 and $0.63642, which could stabilize price drops.
Technical indicators provide additional insights; the Relative Strength Index (RSI) is currently at 60, indicating a slight tilt towards overbought conditions but still within a normal range.
The 50-day Exponential Moving Average (EMA) at $0.65047 supports the bullish sentiment, as it lies below the current price, suggesting an upward trend.
Given these observations, a strategic approach for traders would be to look for entry opportunities above the pivot point. Specifically, initiating a buy above $0.65154 could be prudent, with a take profit target at $0.65811 and a stop loss set at $0.64785 to manage risks effectively.
AUD/USD - Trade Ideas
Entry Price – Buy Above 0.65154
Take Profit – 0.65811
Stop Loss – 0.64785
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$657/ -$369
Profit & Loss Per Mini Lot = +$65/ -$36
AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD falls to $0.65315, down 0.49%, indicating cautious market sentiment.
- Resistance at $0.66054, with further decline possible if levels aren't breached.
- Sell strategy below $0.65598, with clear profit and stop loss targets set.
On April 30, the Australian Dollar (AUD/USD) closed at $0.65315, marking a decline of 0.49%. This downturn reflects a broader trend of caution in the forex markets, influenced by economic uncertainties and fluctuating risk appetites globally. Trading below the pivotal point of $0.65689, the AUD/USD is situated in a precarious position, suggesting potential further weakness. Resistance is set at higher thresholds of $0.66054, $0.66434, and $0.66878, which need to be surpassed to signal a shift towards a bullish outlook. Conversely, support levels are firmly established at $0.64849, $0.64425, and $0.64103, providing potential stopping points for further declines.
The currency pair’s technical indicators provide additional insight into its current dynamics. The 50-Day Exponential Moving Average (EMA), at $0.64853, lies just below the current trading price, indicating a near support zone that could stabilize further price drops. The Relative Strength Index (RSI) at 51 suggests a neutral momentum, pointing neither to overbought nor oversold conditions, which indicates that the currency could sway in either direction based on upcoming economic data and market sentiment.
Entry Price: Sell below $0.65598 if the AUD/USD continues to show weakness. Take Profit: Target a take profit at $0.65034 to capture potential downward movement. Stop Loss: Set a stop loss at $0.66054 to limit risks against unexpected bullish reversals.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.65598
Take Profit – 0.65034
Stop Loss – 0.66054
Risk to Reward – 1: 1.2
Profit & Loss Per Standard Lot = +$564/ -$456
Profit & Loss Per Mini Lot = +$56/ -$45
AUD/USD Price Analysis – April 30, 2024
Daily Price Outlook
Despite the risk-on market sentiment, the AUD/USD currency pair failed to gain any positive traction and remained under pressure around 0.6532, hitting the intraday low of 0.6514 level. However, the downticks in the AUD/USD pair were driven by the release of softer Retail Sales data on Tuesday. The pair lost traction right after the release of lower-than-expected domestic Retail Sales data as weak retail sales suggest subdued consumer spending and slower economic growth, leading the Reserve Bank of Australia to maintain or even lower interest rates to stimulate economic activity, a dovish stance.
Moreover, the broad-based US dollar gained bullish traction on the back of expectations that the Federal Reserve will maintain higher interest rates due to persistent inflation. This bullish US dollar was seen as another key factor that kept the AUD/USD currency pair lower.
Australian Retail Sales Data and Chinese Economic Indicators: Impact on AUD/USD Pair
On the data front, Australian Retail Sales dropped by 0.4% in March, missing expectations for a 0.2% increase and reversing the previous month's 0.3% growth. This disappointed investors, leading to a decline in the Australian Dollar. However, the Australian Dollar might recover as recent inflation data exceeded expectations, hinting that the RBA could postpone rate cuts. Commonwealth Bank also revised its forecast, now expecting the first rate cut in November instead of earlier, which could support the Aussie.
Thus, the decline in Australian Retail Sales pressured the AUD/USD pair initially, but positive inflation data and revised rate cut forecasts from Commonwealth Bank may support the Aussie in the near term.
On the China front, the NBS Manufacturing Purchasing Managers Index (PMI) fell to 50.4, down from 50.8, though slightly better than expected. The Non-manufacturing PMI also dropped to 51.2, matching expectations. The IMF's recent report predicts a slowdown in China's economic growth, forecasting rates of 5.2% in 2023, 4.6% in 2024, and 4.1% in 2025.
Hence, the weaker Chinese economic data and IMF's growth forecast could weigh on the AUD/USD pair due to Australia's export reliance on China, potentially leading to reduced demand for the Australian Dollar.
Impact of Hawkish Fed Comments on AUD/USD Pair
On the US front, the broad-based US dollar has been gaining momentum due to hawkish comments from US Federal Reserve officials, suggesting no immediate rate cuts. The CME FedWatch Tool shows an 88.4% probability of the Fed maintaining interest rates in June, up from 83.5% last week. This stance of higher rates for a longer period is bolstering the US Dollar and posing a challenge for the AUD/USD pair.
Fed Chair Jerome Powell stated that it could take longer than expected to reach the 2% inflation target, indicating a prolonged high-rate environment. Fed officials like Michelle Bowman and Neel Kashkari have also hinted at potential upside inflation risks and the possibility of no rate cuts this year, respectively.
Therefore, the strengthening US dollar, fueled by hawkish Fed comments and increased probability of unchanged rates, poses challenges for the AUD/USD pair, with prolonged high-rate expectations and potential inflation risks influencing market sentiment.
AUD/USD - Technical Analysis
On April 30, the Australian Dollar (AUD/USD) closed at $0.65315, marking a decline of 0.49%. This downturn reflects a broader trend of caution in the forex markets, influenced by economic uncertainties and fluctuating risk appetites globally. Trading below the pivotal point of $0.65689, the AUD/USD is situated in a precarious position, suggesting potential further weakness. Resistance is set at higher thresholds of $0.66054, $0.66434, and $0.66878, which need to be surpassed to signal a shift towards a bullish outlook. Conversely, support levels are firmly established at $0.64849, $0.64425, and $0.64103, providing potential stopping points for further declines.
The currency pair’s technical indicators provide additional insight into its current dynamics. The 50-Day Exponential Moving Average (EMA), at $0.64853, lies just below the current trading price, indicating a near support zone that could stabilize further price drops. The Relative Strength Index (RSI) at 51 suggests a neutral momentum, pointing neither to overbought nor oversold conditions, which indicates that the currency could sway in either direction based on upcoming economic data and market sentiment.
Entry Price: Sell below $0.65598 if the AUD/USD continues to show weakness. Take Profit: Target a take profit at $0.65034 to capture potential downward movement. Stop Loss: Set a stop loss at $0.66054 to limit risks against unexpected bullish reversals.
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USD/CAD Price Analysis – April 30, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair maintained its upward rally and remained well-bid around the 1.3683 level, hitting the intra-day high of 1.3701. The reason for its upward trend could be attributed to the renewed strength of the US Dollar (USD), which provided some support to the pair. However, the US dollar gained traction in the wake of growing acceptance that the Federal Reserve (Fed) will keep rates higher for longer.
Meanwhile, the decline in oil prices was seen as another key factor that kept the USD/CAD pair higher as the Canadian dollar (Loonie) is negatively affected by falling oil prices. Canada's economy relies heavily on oil exports, leading to decreased demand for the currency.
Moving ahead, Investors will keep an eye on the Canadian February Gross Domestic Product (GDP) growth number. The attention will shift to the Federal Open Market Committee's (FOMC) interest rate decision on Wednesday.
Expectation of Higher US Interest Rates Boosts USD/CAD Pair
On the US front, the US dollar gained strength as investors expect the Federal Reserve to keep interest rates high due to ongoing inflation. Fed officials, like Michelle Bowman and Neel Kashkari, don't see the need to lower rates and even suggest the possibility of no rate cuts this year. Some, like Raphael Bostic, might even consider raising rates if inflation worsens. This expectation of higher rates supports the USD, benefiting the USD/CAD pair.
The upcoming FOMC meeting is expected to maintain current rates, with investors watching for any hawkish signals in the statement and press conference, which could strengthen the US dollar further.
Therefore, the expectation of higher US interest rates due to inflation has strengthened the US dollar, benefiting the USD/CAD pair. This trend may continue if the FOMC maintains a hawkish stance.
Bank of Canada Policy Rate and Oil Prices: Impact on USD/CAD
On the Canadian front, traders anticipate that the Bank of Canada (BoC) will likely wait until June or July before considering any cuts to its policy rate. The upcoming February Gross Domestic Product (GDP) data could provide insights into the Canadian economy's performance.
If the report indicates weaker-than-expected data, the BoC might be prompted to consider interest rate cuts sooner, which could weigh on the Canadian dollar (CAD). On the flip side, if the report indicates stronger-than-expected data, the BoC may delay potential interest rate cuts, which could support the Canadian dollar (CAD).
Another factor that has been boosting the USD/CAD pair is the continued decline in oil prices. Canada's economy relies heavily on oil exports, leading to decreased demand for the currency and contributing to the USD/CAD pair's gains.
USD/CAD - Technical Analysis
On April 30, the USD/CAD traded slightly higher at 1.36811, marking an increase of 0.15%. This uptick reflects subtle shifts in market sentiment as traders respond to evolving economic indicators and geopolitical events. The currency pair now hovers just below its critical pivot point at 1.3756, indicating potential volatility in the near term.
The USD/CAD faces immediate resistance at 1.3735, with subsequent thresholds at 1.3788 and 1.3861 that could limit upward movement. Should the pair break through these barriers, it may signal strengthening momentum for the U.S. dollar against the Canadian dollar, influenced by diverging economic policies or shifts in commodity prices, particularly oil, a significant export for Canada. Conversely, the support levels are established at 1.3614, 1.3562, and 1.3516. A decline below these points could suggest growing bearish pressure, potentially due to stronger Canadian economic performance or higher crude oil prices.
Technical indicators such as the Relative Strength Index (RSI) at 52 and the 50-Day Exponential Moving Average (EMA) at 1.3701 offer additional insights. The RSI indicates a neutral momentum, suggesting that the pair is neither overbought nor oversold, while the EMA provides a benchmark for the currency’s current resistance level.
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AUD/USD Price Analysis – April 25, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well-bid around the 0.6528 level, hitting the intraday high of $0.6531. However, the upward rally was driven by multiple positive factors including hawkish sentiment regarding the RBA monetary policy stance and the release of robust Australian Consumer Price Index (CPI) figures.
The hawkish sentiment towards the RBA's monetary policy stance, coupled with robust CPI figures, typically boosts the AUD currency due to expectations of potential interest rate hikes. Furthermore, the risk-on market sentiment, backed by easing tensions in the Middle East, has played a major role in underpinning the AUDUSD currency pair.
Impact of Australian Economic Data and RBA Expectations on AUD/USD Pair
On the data front, Australia's Consumer Price Index (CPI) exceeded expectations, rising by 1.0% in the first quarter of 2024 quarter-on-quarter and 3.6% year-on-year. This was higher than the forecasted 0.8% and 3.4%, respectively, indicating a strong inflationary trend. Meanwhile, the Monthly Consumer Price Index for March also surpassed expectations, reaching 3.5% year-on-year.
Conversely, in Australia, the Judo Bank Composite Output Index rose in April, showing the third consecutive month of expansion in the private sector, primarily driven by the service sector, while manufacturing output declined at a slower rate compared to previous months.
Therefore, the stronger-than-expected CPI and positive private sector growth in Australia strengthen the AUD against the USD.
Furthermore, the upticks in the AUD/USD pair were further bolstered by the growing expectations of a more hawkish stance from the Reserve Bank of Australia (RBA) on interest rates. Luci Ellis, chief economist at Westpac and former RBA Assistant Governor (Economic), highlights that inflation slightly exceeded expectations in the March quarter.
Westpac predicts the RBA will maintain interest rates in May and has revised their forecasted date for the first rate cut from September to November this year. Luci Ellis's remarks on higher inflation and delayed rate cuts boost AUD/USD, signaling a hawkish RBA stance and economic strength.
US Economic Indicators and Market Sentiment's Impact on AUD/USD Pair
On the US front, the US Dollar is unable to extend its upward trend and has turned bearish recently, possibly due to risk-on market sentiment. However, the Greenback's losses might be offset by slight gains in US Treasury yields. The upcoming release of the preliminary Q1 Gross Domestic Product (GDP) figures from the United States is anticipated on Thursday, with expectations of a growth rate slowdown.
These figures will offer insights into the US economy's strength and could hint at the Federal Reserve's (Fed) future moves. If the GDP report shows better-than-expected numbers, it could lead to speculation that the Fed will delay its rate-cut plans.
On the data front, the US Census Bureau's latest report showed that in March, orders for durable goods increased by 2.6%, marking a positive sign for manufacturing. Excluding transportation, new orders rose by 0.2%. On the flip side, the Federal Reserve plans to maintain higher interest rates for a longer period due to ongoing inflation.
This decision comes after robust US consumer inflation data and hawkish remarks from Fed officials. This was seen as one of the key factors that cap losses in the US dollar and limit the upside momentum of the AUD/USD pair.
AUD/USD - Technical Analysis
Today, the Australian Dollar (AUD/USD) recorded a slight uptick, trading at 0.65098, a 0.20% increase. This movement situates the currency pair near critical levels on the four-hour chart that could dictate short-term market dynamics.
The AUD/USD is currently navigating just below a key pivot point set at 0.65345. This level could serve as a springboard for further advances if the pair manages to breach it convincingly. Immediate resistance is closely placed at 0.65362, followed by more substantial barriers at 0.65761 and 0.66157. These figures represent crucial thresholds that could define the bullish potential in upcoming trading sessions.
From a technical perspective, the Relative Strength Index (RSI) is at 66, indicating a slightly overbought condition but not enough to deter potential bullish momentum. Additionally, the 50-day Exponential Moving Average (EMA) at 0.64483 supports the currency pair from below, further validating the bullish sentiment in the market.
Given the current market setup, adopting a tactical trading approach could be beneficial. A buy limit order at 0.64832 with a take profit target at the pivot point of 0.65345 and a stop loss at 0.64523 would leverage potential upward movements while effectively managing risk.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD sees modest gain, positioned just below the pivot at 0.65345, hinting at possible upward movement.
- Resistance levels ahead at 0.65362, 0.65761, and 0.66157 could cap gains; support at 0.64425 provides a cushion.
- Strategy recommendation: Buy limit at 0.64832, with goals set at the pivot and stop loss to manage risks.
Today, the Australian Dollar (AUD/USD) recorded a slight uptick, trading at 0.65098, a 0.20% increase. This movement situates the currency pair near critical levels on the four-hour chart that could dictate short-term market dynamics.
The AUD/USD is currently navigating just below a key pivot point set at 0.65345. This level could serve as a springboard for further advances if the pair manages to breach it convincingly. Immediate resistance is closely placed at 0.65362, followed by more substantial barriers at 0.65761 and 0.66157. These figures represent crucial thresholds that could define the bullish potential in upcoming trading sessions.
On the downside, initial support is marked at 0.64425, with subsequent floors at 0.64103 and 0.63691. These levels are pivotal for traders to watch, as a breach could signal a deeper correction.
From a technical perspective, the Relative Strength Index (RSI) is at 66, indicating a slightly overbought condition but not enough to deter potential bullish momentum. Additionally, the 50-day Exponential Moving Average (EMA) at 0.64483 supports the currency pair from below, further validating the bullish sentiment in the market.
Given the current market setup, adopting a tactical trading approach could be beneficial. A buy limit order at 0.64832 with a take profit target at the pivot point of 0.65345 and a stop loss at 0.64523 would leverage potential upward movements while effectively managing risk.
AUD/USD - Trade Ideas
Entry Price – Buy Limit 0.64832
Take Profit – 0.65345
Stop Loss – 0.64523
Risk to Reward – 1: 1.6
Profit & Loss Per Standard Lot = +$513/ -$309
Profit & Loss Per Mini Lot = +$51/ -$30
AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Current Price: Closed at $0.64521, indicating a slight decline of 0.04%.
- Key Levels: Watch resistance at $0.6494 and support at $0.6411 for trading cues.
- Trading Strategy: Sell below $0.64635, aiming for $0.64244, with a stop at $0.64855.
On April 23, the AUD/USD pair slightly declined, trading at 0.64521, down 0.04%. The minor drop reflects a subtle yet observable bearish sentiment within the trading session.
Currently, the pivot point stands at 0.6465, which serves as a crucial marker for traders monitoring the pair's movement. Resistance levels above this point are set at 0.6494, 0.6536, and 0.6576. These thresholds suggest areas where sellers might regain control, preventing further bullish momentum. Conversely, the support levels are critical to observe, with the immediate support marked at 0.6411. Additional support levels are identified at 0.6373 and 0.6339, which could offer buying opportunities should the price approach these lower boundaries.
Technical indicators provide further insight into the pair's trajectory. The Relative Strength Index (RSI) is at 55, indicating neither overbought nor oversold conditions, suggesting a relatively balanced market dynamic. However, the 50-Day Exponential Moving Average (EMA) at 0.6451 closely aligns with the current price, pointing to a potential consolidation phase in the near term.
Considering the technical landscape, a conservative trading approach would be prudent. Traders might consider initiating a sell position below the minor pivot at 0.64635, targeting a take-profit level at 0.64244, with a stop-loss order set at 0.64855.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.64635
Take Profit – 0.64244
Stop Loss – 0.64855
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$391/ -$220
Profit & Loss Per Mini Lot = +$39/ -$22
AUD/USD Price Analysis – April 23, 2024
Daily Price Outlook
During the early European trading session, the AUD/USD currency pair maintained an upward trend and stayed well bid around the 0.6450 level, reaching an intraday high of 0.6465. The reason for this upward trend can be attributed to the upbeat release of Australia's Judo Bank Purchasing Managers Index (PMI) data on Tuesday. The positive Australian PMI data indicates a strong expansion in the private sector, which could benefit the Australian Dollar. On the flip side, the risk-on-market sentiment, backed by de-escalated tensions in the Middle East, was seen as another key factor that kept the AUD/USD currency pair higher.
Australia's Mixed PMI Data and Consumer Confidence Impact AUD/USD Pair
On the data front, Australia's Judo Bank Purchasing Managers Index (PMI) for April showed promising signs for the Australian Dollar. The Composite PMI rose to a 24-month high of 53.6, indicating a strong expansion in the private sector, especially in services. However, the Manufacturing PMI improved but stayed just below the expansion mark at 49.9. On the flip side, the Services PMI dipped slightly to 54.2. Meanwhile, the ANZ-Roy Morgan Australian Consumer Confidence declined to its lowest level this year at 80.3, with decreases in economic and financial outlooks, particularly impacting renters.
Therefore, the positive PMI data from Australia, especially the strong expansion in the services sector, boosted the Australian Dollar (AUD) against the US Dollar (USD). However, the slight dip in the Services PMI and the decline in consumer confidence may have tempered some of the gains.
Overall, the PMI data indicates a growing economy, which can influence investor sentiment and impact the AUD/USD currency pair positively, although consumer confidence levels could introduce some volatility.
China's Policy Talks and Tariffs Impact Australia
On the China front, there's talk of the People's Bank of China possibly lowering the Medium-term Lending Facility (MLF) rate, which could reduce funding costs. This could impact Australia due to their strong trade ties. The Loan Prime Rate (LPR) in China remains at 3.45%, a key rate for bank loans. Changes in China's policies can affect Australia's market. Additionally, China has imposed a 43.5% tariff on propionic acid imports from the US, affecting various industries like food and medical sectors.
Middle East Tensions Ease, Boosting AUD/USD Pair
On the geopolitical front, reduced tensions in the Middle East are boosting market confidence, lifting riskier assets like the Australian dollar and contributing to gains in the AUD/USD pair. Iran's decision not to retaliate to Israel's recent strike has eased concerns, leading to a two-day drop in gold prices. Traders are now focusing on economic data and global PMIs, signaling a positive risk sentiment. The more relaxed situation in the Middle East has boosted the AUD/USD pair as market sentiment improves, reflecting increased optimism in riskier assets and decreased demand for safe havens like the US Dollar.
US Dollar Strengthens on Economic Data and Fed Stance
On the US front, the US dollar gained strength due to good job numbers, higher consumer prices, and firm statements from the Federal Reserve. This made investors rethink US interest rates. The Fed's reduced plans for rate cuts are backing the US dollar and pushing gold prices down. Now, they expect the Fed to possibly cut rates in September by about 34 basis points, less than earlier forecasts of three cuts. This could limit gains for the AUD/USD pair as the US dollar strengthens on better economic signs and fewer expected rate cuts.
AUD/USD - Technical Analysis
Currently, the pivot point stands at 0.6465, which serves as a crucial marker for traders monitoring the pair's movement. Resistance levels above this point are set at 0.6494, 0.6536, and 0.6576. These thresholds suggest areas where sellers might regain control, preventing further bullish momentum. Conversely, the support levels are critical to observe, with the immediate support marked at 0.6411. Additional support levels are identified at 0.6373 and 0.6339, which could offer buying opportunities should the price approach these lower boundaries.
Technical indicators provide further insight into the pair's trajectory. The Relative Strength Index (RSI) is at 55, indicating neither overbought nor oversold conditions, suggesting a relatively balanced market dynamic. However, the 50-Day Exponential Moving Average (EMA) at 0.6451 closely aligns with the current price, pointing to a potential consolidation phase in the near term.
Considering the technical landscape, a conservative trading approach would be prudent. Traders might consider initiating a sell position below the minor pivot at 0.64635, targeting a take-profit level at 0.64244, with a stop-loss order set at 0.64855.
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AUD/USD Price Analysis – April 18, 2024
Daily Price Outlook
The AUD/USD currency pair has extended its strong upward rally and still flashing green around 0.6445 level. However, the reason for its upward trend can be attributed to the multiple factors including the upbeat performance of ASX 200 Index's.
The ASX 200 Index, a key indicator of Australia's stock market performance, has been gaining ground, particularly notable on Thursday. This upward movement in the index has a positive impact on the Australian Dollar (AUD) against the US Dollar (USD), contributing to the bullish trend in the AUD/USD currency pair.
At the same time, there has been a decline in US Treasury yields, which affects the strength of the US Dollar. Lower yields can reduce the attractiveness of dollar-denominated assets, leading to a weaker US Dollar. This downward pressure on the USD also supports the bullish performance of the AUD/USD pair.
Australian Dollar Strength and Economic Data Impact on AUD/USD Pair
On the AUD front, the Australian Dollar is gaining strength as the ASX 200 Index rises. This boost is fueled by mining stocks performing well due to higher metals prices. A report from Westpac mentions that the Reserve Bank of Australia (RBA) doesn't plan to increase rates soon but wants to be more confident about inflation before considering rate cuts.
On the data front, Australia's Employment Change in March was -6.6K, falling short of the expected 7.2K and the previous 117.6K. Additionally, the Unemployment Rate rose to 3.8%, slightly below the anticipated 3.9% but higher than the previous 3.7%.
Therefore, the AUD/USD currency pair see upward pressure due to the Australian Dollar gaining strength from a rising ASX 200 Index and positive mining stocks. However, weaker employment data could potentially limit the AUD's gains.
Federal Reserve Concerns and Potential Impact on USD and AUD/USD Pair
On the US front, Federal Reserve officials in the US are worried because inflation is higher than they expected. Loretta Mester from the Federal Reserve Bank of Cleveland said they need to be sure that inflation stays around 2%, and they might lower interest rates if the job market gets worse. Fed Governor Michelle Bowman also noticed that inflation is slowing down, and the policies they have now are a bit strict and need to be checked. The Federal Reserve's Beige Book survey found that the US economy is growing a little bit, but businesses are struggling with higher costs.
Therefore, the concerns expressed by Federal Reserve officials about inflation and monetary policy could impact the US Dollar, weakening it if a rate cut occurs due to worsening labor market conditions. This could influence the AUD/USD pair.
AUD/USD - Technical Analysis
The Australian dollar (AUD) has shown resilience against the US dollar (USD) today, recording a modest gain of 0.31% to trade at $0.64541. This movement indicates a positive shift in market sentiment towards the AUD amidst varying global economic conditions.
The pair is currently trading just above its pivot point at $0.6439, suggesting a potential for further upward movement. Immediate resistance is observed at $0.6494, with subsequent levels at $0.6545 and $0.6591. These are critical junctures where sellers might emerge, capping further advances. On the downside, support can be found at $0.6401, $0.6373, and $0.6339. These levels will be crucial in preventing a reversal of the current gains.
The Relative Strength Index (RSI) at 49 mirrors the market’s neutrality, indicating neither overbought nor oversold conditions, and suggests that there is room for movement in either direction. The 50-day Exponential Moving Average (EMA) is set at $0.65, slightly above the current price, indicating that the AUD/USD could face resistance as it attempts to regain higher levels.
Traders looking to capitalize on the AUD's current trajectory should consider entering the market at $0.64381, targeting a take profit at $0.64944, with a stop loss at $0.64018 to manage risk effectively.
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