AUD/USD Price Analysis – Nov 21, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair continued its upward trend, trading near the 0.6520 level.
This rise was due to a weaker tone in the US Dollar, as buyers stepped back to assess US President-elect Donald Trump's proposed policies before making new moves.
Moreover, the recent market reaction to Russian President Vladimir Putin’s approval of a lower threshold for nuclear strikes initially caused concern. However, this quickly faded after comments from both Russian and US officials eased fears of a nuclear conflict.
This helped boost market sentiment, which in turn put pressure on the safe-haven USD, benefiting risk-sensitive currencies like the Australian Dollar.
RBA's Hawkish Stance Boosts AUD/USD as Inflation Concerns Support Australian Dollar
Furthermore, the upticks in the AUD/USD pair gained extra support from the Reserve Bank of Australia's (RBA) recent comments. However, the RBA has maintained a hawkish stance, which means it is focused on keeping inflation under control by using stricter monetary policies.
This approach has been helping the Australian Dollar remain strong against other currencies, including the US Dollar.
Earlier this week, the RBA's November meeting minutes showed that the board is concerned about rising inflation. They highlighted the need to keep interest rates high to prevent inflation from getting worse.
This cautious approach from the RBA reassures investors and boosts confidence in the AUD. Together with the overall positive market mood, this has helped lift the AUD/USD pair.
US Dollar Faces Bearish Pressure Amid Policy Uncertainty and Market Sentiment, Capping AUD/USD Gains
On the US front, the broad-based US dollar was unable to maintain its upward trend and turned bearish due to a softer market tone. Traders have decided to wait on the sidelines for more clarity on US President-elect Donald Trump’s proposed policies before making fresh moves.
Despite this, the expectations that the Federal Reserve (Fed) may adopt a less dovish stance are still supporting the USD. The market is now pricing in a 50% chance that the Fed will cut interest rates by 25 basis points in December, mainly due to concerns that Trump's potential tariffs and tax cuts could push inflation higher.
This outlook is supporting US Treasury bond yields, which is encouraging some buying of the USD. As a result, this keeps a lid on the upside potential for the AUD/USD pair. Traders are now waiting for US economic data and comments from key Federal Reserve officials for further direction.
AUD/USD - Technical Analysis
The AUD/USD is trading at $0.65119, up 0.10% in the 4-hour timeframe, as the pair shows signs of recovery from earlier lows.
The pivot point at $0.65456 serves as a key level to watch, with a bullish breakout above this potentially opening the door to immediate resistance at $0.65918.
Further upside targets include $0.66399, aligning with improving market sentiment for the Australian dollar amid recent positive economic data.
On the downside, immediate support is located at $0.64497, followed by $0.64154 and $0.63763, where buyers may step in if the pair experiences any pullbacks. The 50-day EMA at $0.64945 is acting as a critical support level, reinforcing the bullish outlook while keeping short-term risks contained.
The RSI at 54 reflects neutral momentum, indicating room for both upside or downside movements depending on broader market catalysts.
Traders should monitor any break above $0.65456 for confirmation of further gains, while a drop below $0.64896 could negate the current upward bias and bring the $0.64497 support level into play.
For a strategic approach, an entry above $0.64895 is recommended, with a stop loss at $0.64503 to minimize downside risks. Profit targets are set at $0.65463 and potentially higher levels if resistance is breached.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Resistance Levels: Immediate at $0.65918, followed by $0.66399.
- Support Levels: Key support at $0.64497, with additional levels at $0.64154 and $0.63763.
- Technical Indicators: RSI at 54 and 50 EMA at $0.64945 suggest balanced momentum with potential for further upside.
The AUD/USD is trading at $0.65119, up 0.10% in the 4-hour timeframe, as the pair shows signs of recovery from earlier lows.
The pivot point at $0.65456 serves as a key level to watch, with a bullish breakout above this potentially opening the door to immediate resistance at $0.65918.
Further upside targets include $0.66399, aligning with improving market sentiment for the Australian dollar amid recent positive economic data.
On the downside, immediate support is located at $0.64497, followed by $0.64154 and $0.63763, where buyers may step in if the pair experiences any pullbacks. The 50-day EMA at $0.64945 is acting as a critical support level, reinforcing the bullish outlook while keeping short-term risks contained.
The RSI at 54 reflects neutral momentum, indicating room for both upside or downside movements depending on broader market catalysts.
Traders should monitor any break above $0.65456 for confirmation of further gains, while a drop below $0.64896 could negate the current upward bias and bring the $0.64497 support level into play.
For a strategic approach, an entry above $0.64895 is recommended, with a stop loss at $0.64503 to minimize downside risks. Profit targets are set at $0.65463 and potentially higher levels if resistance is breached.
GOLD (XAU/USD) - Trade Ideas
Entry Price – Buy Above 0.64895
Take Profit – 0.65463
Stop Loss – 0.64503
Risk to Reward – 1: 1.4
Profit & Loss Per Standard Lot = +$568/ -$392
Profit & Loss Per Mini Lot = +$56/ -$39
AUD/USD Price Analysis – Nov 19, 2024
Daily Price Outlook
Following the release of the Reserve Bank of Australia's (RBA) November Meeting Minutes on Tuesday, the Australian Dollar (AUD) remained stable against the US Dollar (USD). According to the minutes, the RBA board is concerned about the possibility of increased inflationary pressures, which underlined the importance of restrictive monetary policy.
Despite recent aggressive pronouncements by Federal Reserve (Fed) officials, the US Dollar (USD) is in a downward correction. However, the Greenback's downside may be limited since investors expect the next Trump administration to prioritize tax cuts and raise tariffs. These policies may increase inflation, limiting the pace of Fed rate decreases.
The US Dollar Index (DXY), a gauge of the USD against a basket of currencies, is presently trading at approximately 106.27. The greenback is struggling to gain ground as the Trump trade appears to be losing steam. However, stronger US economic statistics and cautionary words from the Federal Reserve (Fed) may limit the downside for the USD in the immediate term.
Australian Dollar Gains as RBA Maintains Hawkish Stance on Interest Rates
The Australian Dollar strengthened following hawkish remarks from the Reserve Bank of Australia (RBA). Domestically, the Reserve Bank of Australia (RBA) kept interest rates at 4.35%. RBA Governor Michele Bullock emphasised that existing interest rates are adequately restrictive and will remain so until the central bank is confident in its inflation forecast.
Potential Impact of US-China Trade Tensions on the Australian Dollar
On the Australian front, Donald Trump has threatened to impose 60% tariffs on Chinese products in order to defend US companies and employment. Because China is Australia's largest trading partner, the probable negative spillovers from Trump's policies may cause the Australian Dollar (AUD) to fall.
Meanwhile, China's retail sales increased by 4.8% year on year in October, exceeding the projected 3.8% and the 3.2% growth witnessed in September. Meanwhile, industrial production increased by 5.3% year on year, falling short of the predicted 5.6% and the 5.4% growth seen in the prior period.
Australia's Labor Market Steady, Inflation Expectations Decline
On the economic front, Australia's most recent labour market report showed that the unemployment rate remained stable at 4.1% in October, with a minor gain in employment of 15.9K, all of which supported the perception of a relatively strong labour market.
Australia's seasonally adjusted unemployment rate remained at 4.1% in October, matching market expectations. However, employment change data revealed that just 15.9K new positions were created in October, falling short of the expected 25.0K.
Consumer inflation expectations in Australia fell to 3.8% in November, down from 4.0% the previous month, and reached their lowest level since October 2021.
AUD/USD – Technical Analysis
AUD/USD is trading at $0.65108, up 0.05% as modest bullish momentum dominates the 4-hour chart. The pair is currently holding above the pivot point at $0.64941, signaling a constructive tone.
The 50-day EMA at $0.64805 reinforces the bullish outlook, acting as a dynamic support level, while the RSI at 62 suggests the pair has room for further upside before entering overbought territory. A successful test and hold above $0.64941 could set the stage for an advance toward $0.65463 in the short term, but a failure to maintain this level might lead to a deeper correction.
Traders may look to initiate long positions near the pivot point at $0.64944, targeting $0.65463 with a stop-loss placed at $0.64513 to manage downside risks effectively. However, caution is warranted as the broader market sentiment remains influenced by global risk factors and economic data releases.
Consider a buy limit at $0.64944, with a take-profit target at $0.65463 and a stop-loss at $0.64513 to capitalize on the bullish potential while managing downside risks.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Pivot Level: Holding above $0.64941 favors bullish momentum; failure could lead to a retest of $0.64497.
- Resistance Zones: Key levels to watch are $0.65463 and $0.65958 for potential breakout moves.
- Support Levels: Immediate support at $0.64497, with the 50-day EMA at $0.64805 providing additional strength.
AUD/USD is trading at $0.65108, up 0.05% as modest bullish momentum dominates the 4-hour chart. The pair is currently holding above the pivot point at $0.64941, signaling a constructive tone.
Immediate resistance is at $0.65463, with additional targets at $0.65958 and $0.66399 if the upward trend persists. On the downside, immediate support rests at $0.64497, followed by $0.64154 and $0.63763, which could provide a safety net if selling pressure emerges.
The 50-day EMA at $0.64805 reinforces the bullish outlook, acting as a dynamic support level, while the RSI at 62 suggests the pair has room for further upside before entering overbought territory. A successful test and hold above $0.64941 could set the stage for an advance toward $0.65463 in the short term, but a failure to maintain this level might lead to a deeper correction.
Traders may look to initiate long positions near the pivot point at $0.64944, targeting $0.65463 with a stop-loss placed at $0.64513 to manage downside risks effectively. However, caution is warranted as the broader market sentiment remains influenced by global risk factors and economic data releases.
Consider a buy limit at $0.64944, with a take-profit target at $0.65463 and a stop-loss at $0.64513 to capitalize on the bullish potential while managing downside risks.
AUD/USD - Trade Ideas
Entry Price – Buy Limit 0.64944
Take Profit – 0.65463
Stop Loss – 0.64513
Risk to Reward – 1: 1.2
Profit & Loss Per Standard Lot = +$519/ -$431
Profit & Loss Per Mini Lot = +$51/ -$43
AUD/USD Price Analysis – Nov 14, 2024
Daily Price Outlook
Despite hawkish remarks from RBA Governor Michele Bullock, the AUD/USD currency pair struggled to gain momentum, trading under pressure around the 0.6475 level and hitting an intra-day low of 0.6460.
This downward trend can be attributed to weaker-than-expected employment growth and a slight decline in the participation rate, signaling concerns about Australia's labor market and broader economic recovery.
Moreover, the US dollar’s strength, fueled by the "Trump trades" and stronger-than-anticipated October US Consumer Price Index (CPI) data, has further weighed on the AUD/USD pair.
Looking forward, traders are closely watching the US Producer Price Index (PPI) for short-term opportunities. However, the main focus will be on Fed Chair Jerome Powell’s upcoming speech, which could provide clues about the Fed’s next steps on policy.
RBA's Hawkish Stance Supports AUD, but Slower Employment Growth Puts Pressure on AUD/USD
On the AUD front, the AUD/USD pair could recover as the Reserve Bank of Australia (RBA) Governor Michele Bullock stated that current interest rates are sufficiently restrictive and will remain so until inflation trends are under control.
This suggests that the RBA is committed to maintaining its stance on inflation, which could support the AUD. She also mentioned uncertainty surrounding the actions of the US Federal Reserve and emphasized that the RBA will avoid making any hasty decisions.
Meanwhile, Australia's Prime Minister Anthony Albanese discussed trade with US President-elect Donald Trump, noting the US has a trade surplus with Australia and should "trade fairly" with its ally. He also highlighted Australia's significant investment in security.
On the data front, Australia’s unemployment rate for October was steady at 4.1%, matching expectations. The employment change in October was 15.9K, much lower than the 61.3K increase in September. The participation rate slightly dropped to 67.1% from 67.2% in September. Full-time employment rose by 9.7K, while part-time jobs increased by 6.2K.
Although employment grew, the pace was the slowest in recent months, with only a 0.1% rise compared to a 0.3% average increase over the past six months. Bjorn Jarvis, head of labour statistics, noted that unemployment is still lower than March 2020 levels, despite an increase in jobless numbers compared to last year.
Therefore, the RBA's commitment to maintaining restrictive interest rates supports the AUD, potentially providing upside for the AUD/USD pair. However, slower employment growth and a slight drop in participation may limit the AUD’s strength, keeping the pair under pressure.
US Dollar Strength Driven by Trump’s Election Win and Strong CPI Data, Weighing on AUD/USD
On the US front, the broad-based US dollar has shown strong momentum, with the US Dollar Index (DXY) hovering around 106.60, its highest level since November 2023. The recent election win of Donald Trump has raised expectations of inflationary policies, like potential tariffs, which support the US dollar.
On the data front, the October US Consumer Price Index (CPI) rose by 2.6% year-over-year, while the core CPI, excluding food and energy, increased by 3.3%, both matching forecasts. This data has kept the USD in high demand, impacting the AUD/USD pair by adding pressure on the Australian dollar.
On the monetary policy front, Fed Chair Jerome Powell said that Trump's potential return to the White House won't affect the Fed’s near-term decisions. After a recent 25-basis-point rate cut, Powell emphasized that the Fed does not speculate on future government policies.
As a result of these factors, the US dollar remains strong, keeping the AUD/USD pair under pressure, with the Greenback maintaining its upward momentum.
AUD/USD – Technical Analysis
The Australian Dollar (AUD/USD) has been in a steady downtrend, with the recent price hovering around $0.6475. The bearish momentum intensified after the pair broke below the key support level of $0.6548, which now acts as a resistance.
The next critical support zone lies at $0.6432, and a drop below this could open the door to further losses toward $0.6392 and potentially $0.6349. The Relative Strength Index (RSI) at 35 suggests that the pair is approaching oversold territory, which could hint at a possible rebound in the short term.
Technically, the 50-day Exponential Moving Average (EMA) at $0.6700 reinforces the bearish sentiment, as prices are significantly below this average, indicating continued downward pressure.
Traders looking for potential short positions might consider selling below $0.6495, with a target around $0.6432 and a stop-loss above $0.6548. The setup points to a high probability of bearish continuation unless the pair manages to reclaim support above the $0.6548 mark.
The AUD/USD pair remains bearish with potential for further downside if it stays below $0.6495. An oversold RSI may prompt a short-term bounce, but the overall trend favors sellers.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Bearish Continuation: Below $0.6495 signals further downside.
- Key Support Zone: $0.6432 as a critical level for potential rebounds.
- Oversold RSI: May offer a short-term bounce but trend remains bearish.
The Australian Dollar (AUD/USD) has been in a steady downtrend, with the recent price hovering around $0.6475. The bearish momentum intensified after the pair broke below the key support level of $0.6548, which now acts as a resistance.
The next critical support zone lies at $0.6432, and a drop below this could open the door to further losses toward $0.6392 and potentially $0.6349. The Relative Strength Index (RSI) at 35 suggests that the pair is approaching oversold territory, which could hint at a possible rebound in the short term.
Technically, the 50-day Exponential Moving Average (EMA) at $0.6700 reinforces the bearish sentiment, as prices are significantly below this average, indicating continued downward pressure.
Traders looking for potential short positions might consider selling below $0.6495, with a target around $0.6432 and a stop-loss above $0.6548. The setup points to a high probability of bearish continuation unless the pair manages to reclaim support above the $0.6548 mark.
The AUD/USD pair remains bearish with potential for further downside if it stays below $0.6495. An oversold RSI may prompt a short-term bounce, but the overall trend favors sellers.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.64956
Take Profit – 0.64319
Stop Loss – 0.65485
Risk to Reward – 1: 1.2
Profit & Loss Per Standard Lot = +$637/ -$529
Profit & Loss Per Mini Lot = +$63/ -$52
AUD/USD Price Analysis – Nov 12, 2024
Daily Price Outlook
During the European trading session, the AUD/USD pair struggled to hold its ground, staying weak around the 0.6544 level and hitting an intraday low of 0.6534. However, the downward trend can be attributed to several factors including the anticipated tariff hikes on Chinese goods by US President-Elect Donald Trump pose risks to the AUD, as China is one of Australia's biggest export markets.
Meanwhile, the Westpac Consumer Confidence index in Australia rose by 5.3% to 94.6 in November, marking a two-and-a-half-year high but remaining below 100, indicating continued economic caution among consumers.
Moreover, the US Dollar gained strength as markets expect that Trump’s proposed fiscal policies may drive up investment and labor demand, potentially increasing inflation risks. This could lead the Federal Reserve to tighten its monetary policy, further supporting the US Dollar and applying additional pressure on the AUD/USD pair.
Consumer Confidence in Australia Boosted but Chinese Inflation and Limited Stimulus Weigh on AUD Outlook
On the AUD front, Australia's Westpac Consumer Confidence index rose by 5.3% to 94.6 in November, marking the highest level in two and a half years. This is the second month in a row of improvement, although the index remains below 100, meaning pessimism still outweighs optimism.
Matthew Hassan, a senior economist at Westpac, explained that families are feeling less financial pressure and are less worried about interest rate hikes, with growing confidence in the economy’s future.
Furthermore, the Australian Dollar also faced pressure from disappointing Chinese inflation data. China's Consumer Price Index (CPI) rose just 0.3% year-over-year in October, slightly below forecasts and down from September’s 0.4%, marking the lowest rate since June.
Month-over-month, the CPI fell by 0.3%, a bigger drop than expected, highlighting weaker demand. In the meantime, Bloomberg reported that Chinese regulators may soon lower taxes on home purchases, aiming to boost the real estate market.
Although, the losses in the AUD may be limited by the Reserve Bank of Australia’s hawkish tone. RBA Governor Michele Bullock recently stressed the need for tight monetary policy due to high inflation and a strong job market.
China’s latest stimulus package, a 10 trillion Yuan debt relief for local governments, was smaller than expected and lacked direct economic stimulus, further dampening optimism in Australia’s key trading partner.
Therefore, the rise in Australia's consumer confidence and the RBA's hawkish stance may provide some support for the AUD. However, weaker Chinese inflation data and limited stimulus from China could weigh on demand, likely putting downward pressure on the AUD/USD pair.
US Dollar Strengthens on Inflation Expectations and Fed's Restrictive Stance, Weighing on AUD/USD
On the US front, the US dollar is strengthening after Donald Trump’s election victory. Analysts believe that if his policies on spending, investment, and labor are put into action, they could increase inflation. This might lead the Federal Reserve (Fed) to raise interest rates, which would boost the US dollar even more.
Minneapolis Fed President Neel Kashkari said the economy is doing well but the Fed still needs to do more to bring inflation back to the 2% target. He added that the Fed needs more evidence before thinking about another rate cut.
Morgan Stanley analysts break down Trump’s potential economic plans into three areas: tariffs, immigration, and fiscal measures. They think tariffs will be a top priority, with a possible 10% tariff on all goods and a 60% tariff on Chinese goods.
While Trump’s return could lead to policy changes, Fed Chair Jerome Powell said the Fed doesn't make decisions based on possible policies. Powell emphasized that the Fed will focus on current data after cutting interest rates by 0.25%, bringing them to a range of 4.50%-4.75%.
Traders are now watching for the upcoming US Consumer Price Index (CPI) data. October’s headline CPI is expected to rise by 2.6% year-over-year, with core CPI projected at 3.3%, offering further insights into inflation trends.
Therefore, the strengthening US Dollar, driven by expectations of higher inflation and tighter Fed policies, puts pressure on the AUD/USD pair. If US inflation data aligns with forecasts, the Fed may continue its restrictive stance, further strengthening the US Dollar against the AUD.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.65554, down 0.28%, as it faces resistance near the pivot point of $0.65607. This level now serves as a critical marker for directional movement.
Immediate resistance sits just above at $0.65820, with additional barriers at $0.65981 and $0.66197. These levels could curtail short-term upside moves, especially as the pair remains under pressure from a strong US dollar and cautious sentiment around global growth.
On the downside, immediate support lies at $0.65369. Should the price break below this level, it may test the next support at $0.65166, with a further move toward $0.64962 if bearish momentum intensifies.
The Relative Strength Index (RSI) is currently at 30, indicating oversold conditions that could prompt a corrective bounce. However, a continued stay in the oversold region might also reflect persistent selling pressure, leaving the bearish outlook intact.
The 50-day Exponential Moving Average (EMA) is at $0.65879, slightly above the current price. This gap underscores the bearish trend, as the current price remains below both the pivot and key moving averages.
Given these signals, the short-term outlook for AUD/USD remains bearish, with potential for further declines if it stays below the $0.65607 pivot. Traders may consider entering a sell position below $0.65607, with a take-profit target of $0.65344 and a stop-loss at $0.65792 to manage risk.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD stays bearish below the pivot at $0.65607, pressured by dollar strength.
- RSI at 30 suggests oversold conditions, but selling momentum remains high.
- Key support at $0.65369; breach could trigger a further decline toward $0.65166.
The AUD/USD pair is trading at $0.65554, down 0.28%, as it faces resistance near the pivot point of $0.65607. This level now serves as a critical marker for directional movement.
Immediate resistance sits just above at $0.65820, with additional barriers at $0.65981 and $0.66197. These levels could curtail short-term upside moves, especially as the pair remains under pressure from a strong US dollar and cautious sentiment around global growth.
On the downside, immediate support lies at $0.65369. Should the price break below this level, it may test the next support at $0.65166, with a further move toward $0.64962 if bearish momentum intensifies.
The Relative Strength Index (RSI) is currently at 30, indicating oversold conditions that could prompt a corrective bounce. However, a continued stay in the oversold region might also reflect persistent selling pressure, leaving the bearish outlook intact.
The 50-day Exponential Moving Average (EMA) is at $0.65879, slightly above the current price. This gap underscores the bearish trend, as the current price remains below both the pivot and key moving averages.
Given these signals, the short-term outlook for AUD/USD remains bearish, with potential for further declines if it stays below the $0.65607 pivot. Traders may consider entering a sell position below $0.65607, with a take-profit target of $0.65344 and a stop-loss at $0.65792 to manage risk.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.65607
Take Profit – 0.65344
Stop Loss – 0.65792
Risk to Reward – 1: 1.4
Profit & Loss Per Standard Lot = +$263/ -$185
Profit & Loss Per Mini Lot = +$26/ -$18
AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Immediate Resistance: AUD/USD faces resistance at $0.66612; a break above may signal further upside.
- Pivot and Support Levels: $0.66395 is a key pivot; $0.65929 serves as critical support.
- RSI Reading: With an RSI of 63, momentum is moderately strong but nearing overbought levels.
AUD/USD is showing strength, trading at $0.66208, following a rebound that lifted the pair above the crucial support level of $0.66235. The immediate resistance sits at $0.66612, and if breached, it could open the door to further gains towards $0.66849.
However, the pivot point at $0.66395 remains a critical level for traders, with the 50-day Exponential Moving Average (EMA) at $0.65940, suggesting underlying support.
Technical indicators present a mixed picture; the Relative Strength Index (RSI) is currently at 63, leaning towards overbought territory but not yet signaling a full reversal. This level indicates that buyers maintain control, though caution may be warranted as momentum could slow if resistance levels hold.
For bears, a drop below the immediate support of $0.65929 could shift the bias downward, potentially driving prices towards $0.65646 and then to the next support at $0.65471.
In the short term, the Australian dollar appears poised to extend its rally, though this optimism is fragile and reliant on maintaining levels above $0.66235. A close below the 50-day EMA at $0.65940 would signal a possible shift to bearish sentiment.
Given the current dynamics, traders may look to sell below $0.66260 with targets near $0.65933 while setting a stop loss at $0.66444.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.66260
Take Profit – 0.65933
Stop Loss – 0.66444
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$327/ -$184
Profit & Loss Per Mini Lot = +$32/ -$18
AUD/USD Price Analysis – Nov 07, 2024
Daily Price Outlook
Despite a weaker-than-expected Australian Trade Balance for September, the AUD/USD currency pair continued its upward trend, staying strong around the 0.6632 level and reaching a daily high of 0.6639.
The Australian Dollar (AUD) outperformed its major peers, while the US Dollar (USD) faced a pullback after a rally sparked by Trump’s comments on Wednesday, ahead of the Federal Reserve’s (Fed) policy meeting at 19:00 GMT.
On the flip side, the US Dollar Index (DXY), which measures the USD against six major currencies, dropped from a four-month high of 105.30 to around 104.80. The Fed is widely expected to reduce interest rates by 25 basis points (bps), bringing them to a range of 4.50%-4.75%, according to the CME FedWatch tool.
AUD/USD Strengthened Amid RBA's Hawkish Stance and China Stimulus Expectations
On the AUD front, the Australian Dollar (AUD) bounced back strongly, despite a weaker-than-expected Australian Trade Balance for September. The Australian Dollar strengthened on the back of strong expectations regarding the Reserve Bank of Australia’s (RBA) hawkish stance on interest rates.
However, the RBA kept its Official Cash Rate (OCR) unchanged at 4.35% and highlighted the need for a strict policy to control inflation, driven by a strong labor market. This has given the AUD a boost.
On the data front, the Australian Trade Balance for September showed a surprising drop. The trade surplus fell to 4,609 million AUD from 5,284 million AUD in August, which was below economists' expectations of 5,300 million AUD. This was the lowest surplus since March, due to a decline in both exports and imports.
Despite this, the AUD continued to rise, supported by the possibility of China rolling out economic stimulus to boost its economy. The potential boost in Chinese investments and consumption, especially following US Republican Donald Trump’s presidential election victory, is positive for Australia as China is its main trading partner.
Therefore, the stronger Australian Dollar, driven by the RBA's hawkish stance and expectations of Chinese economic stimulus, supported the AUD/USD pair, despite a weaker-than-expected Trade Balance. This likely contributed to upward pressure on the AUD/USD pair, boosting its value.
AUD/USD – Technical Analysis
AUD/USD is showing strength, trading at $0.66208, following a rebound that lifted the pair above the crucial support level of $0.66235. The immediate resistance sits at $0.66612, and if breached, it could open the door to further gains towards $0.66849.
However, the pivot point at $0.66395 remains a critical level for traders, with the 50-day Exponential Moving Average (EMA) at $0.65940, suggesting underlying support.
Technical indicators present a mixed picture; the Relative Strength Index (RSI) is currently at 63, leaning towards overbought territory but not yet signaling a full reversal. This level indicates that buyers maintain control, though caution may be warranted as momentum could slow if resistance levels hold.
For bears, a drop below the immediate support of $0.65929 could shift the bias downward, potentially driving prices towards $0.65646 and then to the next support at $0.65471.
In the short term, the Australian dollar appears poised to extend its rally, though this optimism is fragile and reliant on maintaining levels above $0.66235. A close below the 50-day EMA at $0.65940 would signal a possible shift to bearish sentiment.
Given the current dynamics, traders may look to sell below $0.66260 with targets near $0.65933 while setting a stop loss at $0.66444.
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