AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trades at $0.65962, down 0.04%, with key support at $0.6580.
- Immediate resistance levels at $0.6620, $0.6639, and $0.6671 mark potential upward targets.
- RSI at 32 suggests near-oversold conditions, with 50 EMA at $0.6643 providing resistance.
AUD/USD is currently trading at $0.65962, reflecting a slight decline of 0.04%. The pivot point at $0.6598 is a critical level for gauging the next market direction. Immediate resistance is noted at $0.6620, with further resistance at $0.6639 and $0.6671.
These levels are pivotal as they could signal potential upward movements if the price breaches them. Conversely, immediate support is found at $0.6580, followed by $0.6558 and $0.6543, which could indicate further declines if the price drops below these levels.
Technical indicators show the Relative Strength Index (RSI) at 32, indicating that the currency pair is nearing oversold conditions. The 50-day Exponential Moving Average (EMA) is positioned at $0.6643, suggesting potential resistance if the price attempts a rebound.
Given the current market dynamics, the outlook for AUD/USD remains bearish below the pivot point of $0.6598. The strategy for traders would be to consider selling below $0.66126, with a take profit target at $0.65797 and a stop loss at $0.66330.
This approach capitalizes on the downward momentum while safeguarding against potential rebounds.
The economic backdrop, including weaker commodity prices and domestic economic concerns, continues to weigh on the Australian dollar. Additionally, the stronger US dollar, bolstered by higher yields and positive economic data, adds further pressure on the AUD/USD pair.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.66126
Take Profit – 0.65797
Stop Loss – 0.66330
Risk to Reward – 1: 1.6
Profit & Loss Per Standard Lot = +$329/ -$204
Profit & Loss Per Mini Lot = +$32/ -$20
AUD/USD Price Analysis – May 30, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair was able to stop its previous bearish trend and regained its strength around the 0.6623 level, hitting an intra-day high of 0.6623.
The bullish performance was driven by several favorable factors, including the increase in the Australian 10-year Government Bond Yield, which has reached a four-week high of 4.52%.
This rise in yield signals to investors that the Reserve Bank of Australia (RBA) may maintain higher interest rates for a longer period, enhancing the attractiveness of Australian assets.
Furthermore, the previously released upbeat Australian economic data has bolstered the AUD. Australia’s Monthly Consumer Price Index (CPI) showed robust figures, prompting speculation about another potential rate hike by the RBA.
Additionally, Australia's Private Capital Expenditure increased by 1.0% in Q1, surpassing expectations and reflecting positive business investment trends.
Moreover, China, a significant trading partner for Australia, has lifted bans on beef shipments from five major Australian meat producers. This development is likely to boost Australia's export revenues and, in turn, support the Australian Dollar and contributed to the AUD/USD pair gains.
Australia's 10-Year Government Bond Yield Reaches a Four-Week High
It should be noted that Australian 10-year Government Bond Yield hitting a four-week high of 4.52% is a noteworthy event impacting the AUD/USD pair. This increase in bond yield indicates stronger investor confidence in the Australian economy and expectations that the RBA might maintain a tighter monetary policy to combat inflation.
However, the higher bond yields often attract foreign investment, thereby increasing demand for the Australian Dollar.
Meanwhile, the recent data releases have also played a major role in this sentiment. The robust Monthly CPI figures suggest persistent inflationary pressures, which the RBA is closely monitoring.
The RBA's May policy meeting minutes revealed that the central bank had considered an interest rate increase, highlighting its commitment to keeping inflation within the target range.
This stance is likely to support the AUD by suggesting that higher interest rates might prevail, making Australian assets more attractive to investors.
Steady US Dollar: Hawkish Fed Comments and Its Impact on AUD/USD
On the US front, the US Dollar has remained steady, buoyed by hawkish comments from Federal Reserve officials, which has influenced the AUD/USD pair. Fed officials have noted that achieving 2% inflation is still challenging and that ongoing inflation requires a cautious approach to monetary policy.
For example, Atlanta Fed President Raphael Bostic highlighted widespread price gains, and Minneapolis Fed President Neel Kashkari mentioned possible future rate hikes, showing the Fed's vigilance.
However, the US Dollar Index (DXY), which measures the USD against six major currencies, trades higher around 105.10, supported by risk aversion sentiment.
This stability in the USD, coupled with high US Treasury yields, has placed downward pressure on the AUD/USD pair. Despite this, the Australian Dollar has shown resilience due to domestic economic strengths and positive developments with China.
AUD/USD - Technical Analysis
AUD/USD is currently trading at $0.65962, reflecting a slight decline of 0.04%. The pivot point at $0.6598 is a critical level for gauging the next market direction. Immediate resistance is noted at $0.6620, with further resistance at $0.6639 and $0.6671.
These levels are pivotal as they could signal potential upward movements if the price breaches them. Conversely, immediate support is found at $0.6580, followed by $0.6558 and $0.6543, which could indicate further declines if the price drops below these levels.
Technical indicators show the Relative Strength Index (RSI) at 32, indicating that the currency pair is nearing oversold conditions. The 50-day Exponential Moving Average (EMA) is positioned at $0.6643, suggesting potential resistance if the price attempts a rebound.
Given the current market dynamics, the outlook for AUD/USD remains bearish below the pivot point of $0.6598.
The strategy for traders would be to consider selling below $0.66126, with a take profit target at $0.65797 and a stop loss at $0.66330. This approach capitalizes on the downward momentum while safeguarding against potential rebounds.
The economic backdrop, including weaker commodity prices and domestic economic concerns, continues to weigh on the Australian dollar. Additionally, the stronger US dollar, bolstered by higher yields and positive economic data, adds further pressure on the AUD/USD pair.
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AUD/USD Price Analysis – May 28, 2024
Daily Price Outlook
Despite the hawkish Fed minutes and stronger US economic data, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6666 level, hitting an intraday high of 0.6674.
However, the reason for its upward trend could be attributed to the risk-on market sentiment, supported by the upbeat US economic data. This was evident with April's Durable Goods Orders, showing a solid recovery with a 0.7% month-over-month increase, compared to the forecasted 0.8% decline.
On the other hand, the US Dollar lost traction despite upbeat US data and hawkish remarks by the Fed, due to lower US Treasury yields. Hence, the bearish US dollar was seen as another key factor that kept the AUD/USD pair higher.
In contrast, the lower-than-expected growth in Australia's April Retail Sales, coupled with a previous decline, might weigh on the AUD currency, suggesting potential challenges for the country's economic recovery.
US Dollar Weakens Amid Mixed Signals; Impact on AUD/USD Pair
On the US front, the broad-based US dollar is losing ground due to declining Treasury yields. However, the probability of a September rate cut by the Federal Reserve has decreased to 44.9%.
Fed officials, including Michelle Bowman and Loretta Mester, are scheduled to speak this week. Mester emphasizes the need for clearer economic assessments in Fed statements, while Bowman stresses the importance of shrinking the balance sheet, especially during economic strength.
On the data front, the University of Michigan's Consumer Inflation Expectations for May eased slightly to 3.0%. The Consumer Sentiment Index rose to 69.1 but remains the lowest in six months.
Durable Goods Orders for April increased by 0.7%, contrasting with the forecasted decline of 0.8%, though March's figure was revised down to 0.8% from the initial 2.6%.
Therefore, the weakening dollar, reduced rate cut odds, and positive economic data support the AUD/USD pair. However, lingering economic uncertainties and Fed policy adjustments could introduce volatility.
AUD's Strength and China's Economic Measures Support AUD/USD Pair
On the AUD front, the uptick in the AUD/USD pair is further bolstered by an improved risk appetite. The latest Reserve Bank of Australia (RBA) meeting minutes indicate uncertainty in predicting future cash rate changes, with recent data suggesting inflation may stay above the 2-3% target for a while.
On the China front, Shanghai has announced support measures for the property sector. They're cutting down payment requirements and lowering mortgage rates. Plus, China launched a huge $47 billion fund to boost its semiconductor industry. This could affect Australia because they're closely tied in trade.
Therefore, the AUD/USD pair is further supported by the AUD's strength due to improved risk appetite and uncertainty in future cash rate changes, along with China's measures to stimulate its economy.
AUD/USD - Technical Analysis
The AUD/USD pair is trading at $0.66583, showing a 0.24% increase on the 4-hour chart. The pivot point, marked at $0.6669, is crucial for determining the market direction. Immediate resistance levels are $0.6684, $0.6711, and $0.6731. On the downside, immediate support is identified at $0.6638, followed by $0.6617 and $0.6595.
The Relative Strength Index (RSI) stands at 57, indicating moderate bullish momentum. The 50-day Exponential Moving Average (EMA) is positioned at $0.6654, suggesting that the current price is slightly above this short-term average, reinforcing a bullish outlook.
The outlook for AUD/USD remains slightly bullish above the pivot point of $0.6669. Traders may consider selling below $0.66691, with a take profit target at $0.66371 and a stop loss at $0.66844.
The technical landscape suggests that AUD/USD is experiencing moderate bullish momentum, with the RSI at 57 supporting this outlook. The price above the 50-day EMA at $0.6654 adds to the bullish sentiment.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trading at $0.66583, up 0.24%, shows moderate bullish momentum.
- Immediate resistance levels are $0.6684, $0.6711, and $0.6731.
- Immediate support levels are $0.6638, $0.6617, and $0.6595, critical for maintaining current levels.
The AUD/USD pair is trading at $0.66583, showing a 0.24% increase on the 4-hour chart. The pivot point, marked at $0.6669, is crucial for determining the market direction. Immediate resistance levels are $0.6684, $0.6711, and $0.6731. On the downside, immediate support is identified at $0.6638, followed by $0.6617 and $0.6595.
The Relative Strength Index (RSI) stands at 57, indicating moderate bullish momentum. The 50-day Exponential Moving Average (EMA) is positioned at $0.6654, suggesting that the current price is slightly above this short-term average, reinforcing a bullish outlook.
The outlook for AUD/USD remains slightly bullish above the pivot point of $0.6669. Traders may consider selling below $0.66691, with a take profit target at $0.66371 and a stop loss at $0.66844.
The technical landscape suggests that AUD/USD is experiencing moderate bullish momentum, with the RSI at 57 supporting this outlook. The price above the 50-day EMA at $0.6654 adds to the bullish sentiment.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.66691
Take Profit – 0.66371
Stop Loss – 0.66844
Risk to Reward – 1: 2
Profit & Loss Per Standard Lot = +$320/ -$153
Profit & Loss Per Mini Lot = +$32/ -$15
AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD Price: $0.66191, unchanged, with immediate support at $0.66091 and resistance at $0.66531.
- RSI: 33, nearing oversold conditions, indicating potential for a short-term bounce.
- 50-day EMA: $0.66634, reinforcing bearish outlook as the price remains below this resistance level.
The AUD/USD is currently trading at $0.66191, unchanged on the day. The 4-hour chart highlights a pivot point at $0.66340. Immediate resistance levels are identified at $0.66531, $0.66822, and $0.67110, while immediate support levels are $0.66091, $0.65856, and $0.65589.
The Relative Strength Index (RSI) is at 33, indicating the pair is nearing oversold territory. This suggests potential for a short-term bounce, yet the broader trend remains bearish. The 50-day Exponential Moving Average (EMA) at $0.66634 acts as a significant resistance level, reinforcing the bearish outlook as long as the price remains below this mark.
Technically, the AUD/USD shows a weak bias as it hovers around the pivot point. The recommendation is to enter a sell position below $0.66336, targeting a take-profit level of $0.65970 with a stop loss at $0.66585. This setup leverages the potential continuation of the bearish trend while managing risk effectively.
Despite the neutral price movement today, the overall sentiment remains bearish given the proximity to the 50-day EMA and the current RSI level. If the AUD/USD breaks below the immediate support at $0.66091, further declines towards $0.65856 and $0.65589 are likely. Conversely, a move above the pivot point of $0.66340 could test the resistance levels at $0.66531 and $0.66822.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.66336
Take Profit – 0.65970
Stop Loss – 0.66585
Risk to Reward – 1: 1.4
Profit & Loss Per Standard Lot = +$389/ -$249
Profit & Loss Per Mini Lot = +$36/ -$24
AUD/USD Price Analysis – May 23, 2024
Daily Price Outlook
Despite a bullish US dollar and a drop in consumer inflation expectations, the AUD/USD currency pair maintained its upward rally, remaining well-bid around the 0.6623 level and hitting an intra-day high of 0.6633. The reason for its bullish rally can be attributed to the risk-on market sentiment, the Reserve Bank of Australia's (RBA) decision to maintain a steady policy, and the acknowledgment of increased inflation risks.
Conversely, the bullish US dollar, driven by the hawkish Federal Reserve stance, was a key factor that limited additional gains in the AUD/USD pair. Another factor capping gains in the AUD/USD pair was the drop in consumer inflation expectations. The Consumer Inflation Expectation, released by the Melbourne Institute, showed consumer expectations
Impact on AUD/USD Pair Amid Economic Signals & Policy Decisions
The RBA meeting minutes from May 2024 revealed that the board considered raising interest rates but decided to keep them steady as policymakers found it difficult to predict future changes in the cash rate and noted that recent data increased the risk of inflation staying above the target for a longer period.
On the data front, consumer inflation expectations in Australia dropped to 4.1% in May from 4.6% in April, the lowest since October 2021. Meanwhile, the private sector grew for the fourth month in a row, with the Composite PMI dipping to 52.6 from 53.0 in April, driven by the services sector, though manufacturing remained weak with a PMI of 49.6.
Whereas, the ASX 200 Index fell below 7,800, hit by declining mining and energy stocks due to lower commodity prices, and weak performance on Wall Street after FOMC meeting minutes raised concerns about slow progress on inflation.
Therefore, the mixed economic signals and concerns about inflation likely put pressure on the AUD/USD pair, causing potential fluctuations. The decision to maintain steady interest rates, weak manufacturing data, and a decline in the ASX 200 could lead to AUD weakening.
Impact on AUD/USD Pair Amid Strong Dollar and Fed Caution
On the US front, the US dollar remains strong after the latest FOMC meeting minutes highlighted ongoing concerns about persistent inflation. Fed policymakers are hesitant to cut interest rates, expecting it to take longer for inflation to improve. The CME FedWatch Tool shows the probability of a 25 basis-point rate cut in September has slightly decreased to 50.7% from 51.6%.
Federal Reserve officials, including Boston President Susan Collins and Governor Christopher Waller, emphasized the need for patience and more favorable inflation data before considering easing policies.
Therefore, the strong Dollar and cautious stance of the Fed could lead to downward pressure on the AUD/USD pair, causing the Australian Dollar to weaken against the US Dollar.
AUD/USD - Technical Analysis
The AUD/USD is currently trading at $0.66191, unchanged on the day. The 4-hour chart highlights a pivot point at $0.66340. Immediate resistance levels are identified at $0.66531, $0.66822, and $0.67110, while immediate support levels are $0.66091, $0.65856, and $0.65589.
The Relative Strength Index (RSI) is at 33, indicating the pair is nearing oversold territory. This suggests potential for a short-term bounce, yet the broader trend remains bearish. The 50-day Exponential Moving Average (EMA) at $0.66634 acts as a significant resistance level, reinforcing the bearish outlook as long as the price remains below this mark.
Technically, the AUD/USD shows a weak bias as it hovers around the pivot point. The recommendation is to enter a sell position below $0.66336, targeting a take-profit level of $0.65970 with a stop loss at $0.66585. This setup leverages the potential continuation of the bearish trend while managing risk effectively.
Despite the neutral price movement today, the overall sentiment remains bearish given the proximity to the 50-day EMA and the current RSI level. If the AUD/USD breaks below the immediate support at $0.66091, further declines towards $0.65856 and $0.65589 are likely. Conversely, a move above the pivot point of $0.66340 could test the resistance levels at $0.66531 and $0.66822.
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AUD/USD Price Analysis – May 21, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well-bid around the 0.6669 level, hitting the intraday high of 0.6676. The reason for its upward trend could be attributed to the hawkish RBA minutes and a slight decline in the US Dollar.
The Reserve Bank of Australia recently discussed the possibility of raising interest rates further due to concerns that inflation might remain high for an extended period. This underpinned the AUD currency and contributed to the gains in the AUD/USD pair.
Furthermore, the risk-on market sentiment, backed by the belief that the Federal Reserve will cut interest rates in the US, was seen as another key factor that underpinned the riskier Australian dollar and extended gains for the AUD/USD pair.
Mixed Signals Impacting AUD/USD Amid Fed Rate Cut Speculations and Inflation Concerns
Despite hints from Federal Reserve (Fed) officials suggesting a more hawkish stance on interest rates, the US Dollar is still facing challenges and remaining under pressure. Traders are betting on rate cuts in September, with a 61% chance according to the CME FedWatch tool.
This probability has decreased from 65% recorded just a week ago. The AUD/USD pair may see upward pressure if the US Dollar weakens due to expectations of rate cuts in September, despite hints of a hawkish stance from Fed officials.
On the flip side, Cleveland Fed Bank President Loretta Mester warned that inflation risks are increasing, suggesting that reducing interest rates three times this year might not be the right move. She emphasized the importance of keeping interest rates the same and highlighted the need to gather more information before deciding on any changes.
Reserve Bank of Australia's Hawkish Tone Boosts AUD/USD Pair
Another factor boosting the AUD/USD pair was the Reserve Bank of Australia (RBA) minutes from the May meeting, indicating policymakers' discussions about potential interest rate hikes due to concerns over prolonged high inflation risks. This development strengthens the Australian dollar as it contrasts with expectations of US rate cuts.
The market perceives the RBA's consideration of further rate increases as a positive signal for the Australian economy, enhancing demand for the Aussie asset. However, global economic uncertainties and fluctuations in risk sentiment could temper the currency's strength.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.66614, down 0.15% in the 4-hour timeframe. This modest decline reflects the prevailing cautious sentiment in the market, as traders weigh the impacts of global economic data and central bank policies. Key technical levels are crucial for understanding potential price movements.
The pivot point is set at $0.6650, acting as a critical benchmark for traders. Immediate resistance levels are identified at $0.6682, followed by $0.6711 and $0.6746. These resistance levels indicate potential barriers to upward movement, suggesting areas where selling pressure might intensify.
On the downside, immediate support is noted at $0.6618, with further support levels at $0.6586 and $0.6559. These support levels are essential for preventing further declines, offering potential rebound points if the market faces downward pressure.
The Relative Strength Index (RSI) is at 43, indicating a slightly bearish sentiment but still within the neutral range. This level suggests that the AUD/USD is neither overbought nor oversold, allowing for possible fluctuations based on upcoming market data.
The 50-day Exponential Moving Average (EMA) is positioned at $0.6676. Currently, the price is trading below this level, hinting at a bearish outlook in the short term. However, if the price moves above the 50-day EMA, it could signal a shift towards a more bullish trend.
Conclusion: The recommended trading strategy is to buy above $0.66505, with a take profit target at $0.66923 and a stop loss at $0.66284.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trading at $0.66614, down 0.15%, reflecting a cautious market sentiment.
- Immediate resistance levels are $0.6682, $0.6711, and $0.6746; potential barriers to upward movement.
- Support levels at $0.6618, $0.6586, and $0.6559 are crucial for preventing further declines.
The AUD/USD pair is currently trading at $0.66614, down 0.15% in the 4-hour timeframe. This modest decline reflects the prevailing cautious sentiment in the market, as traders weigh the impacts of global economic data and central bank policies. Key technical levels are crucial for understanding potential price movements.
The pivot point is set at $0.6650, acting as a critical benchmark for traders. Immediate resistance levels are identified at $0.6682, followed by $0.6711 and $0.6746. These resistance levels indicate potential barriers to upward movement, suggesting areas where selling pressure might intensify.
On the downside, immediate support is noted at $0.6618, with further support levels at $0.6586 and $0.6559. These support levels are essential for preventing further declines, offering potential rebound points if the market faces downward pressure.
The Relative Strength Index (RSI) is at 43, indicating a slightly bearish sentiment but still within the neutral range. This level suggests that the AUD/USD is neither overbought nor oversold, allowing for possible fluctuations based on upcoming market data.
The 50-day Exponential Moving Average (EMA) is positioned at $0.6676. Currently, the price is trading below this level, hinting at a bearish outlook in the short term. However, if the price moves above the 50-day EMA, it could signal a shift towards a more bullish trend.
Conclusion: The recommended trading strategy is to buy above $0.66505, with a take profit target at $0.66923 and a stop loss at $0.66284.
AUD/USD - Trade Ideas
Entry Price – Buy Above 0.66505
Take Profit – 0.66923
Stop Loss – 0.66284
Risk to Reward – 1: 1.8
Profit & Loss Per Standard Lot = +$418/ -$221
Profit & Loss Per Mini Lot = +$41/ -$22
AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trades at $0.66823, down 0.14%, with key resistance at $0.6734.
- RSI at 66 indicates nearing overbought conditions, suggesting potential further bearish movement.
- Strategic sell below $0.67126 with take-profit at $0.66483 and stop-loss at $0.67500.
AUD/USD is currently trading at $0.66823, down 0.14% from the previous session. The pivot point is situated at $0.6714. Immediate resistance levels are at $0.6734, $0.6759, and $0.6779.
On the downside, immediate support levels are at $0.6649, $0.6614, and $0.6579. These levels are critical for traders as they indicate potential points of breakout or breakdown, guiding trading decisions.
The Relative Strength Index (RSI) is currently at 66, suggesting that the market is approaching overbought conditions. This could imply that a bearish correction is likely if buying pressure diminishes. The 50-day Exponential Moving Average (EMA) is at $0.6616, which supports the medium-term bullish trend.
Given these technical indicators, a strategic trading approach is advisable. Selling below the pivot point of $0.67126 could be beneficial, targeting a take-profit level of $0.66483 and setting a stop-loss at $0.67500.
This strategy hinges on the expectation that if AUD/USD fails to surpass the immediate resistance level, it may correct downward toward the support levels.
The RSI nearing overbought territory suggests that the current downward trend might continue if resistance levels hold. A failure to breach the resistance at $0.6734 could result in a pullback toward the support at $0.6649 or even lower.
Traders should remain vigilant for any shifts in market sentiment that could alter the trading landscape.
In summary, while AUD/USD is currently experiencing downward pressure, technical indicators suggest the possibility of further bearish movement. A strategic approach would be to sell below $0.67126 with a take-profit target at $0.66483 and a stop-loss at $0.67500.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.67126
Take Profit – 0.66483
Stop Loss – 0.67500
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$643/ -$374
Profit & Loss Per Mini Lot = +$64/ -$37
AUD/USD Price Analysis – May 16, 2024
Daily Price Outlook
Despite the bearish US dollar, the AUDUSD currency pair was unable to extend its upward rally and edged lower around 0.6671, hitting the intraday low of 0.6669 level. However, the reason for its downward trend can be attributed to the dovish sentiment surrounding RBA’s policy stance, which undermined the AUD currency and contributed to the AUD/USD pair losses.
Moreover, the bearish US dollar, triggered by the release of the latest Consumer Price Index (CPI) report, was seen as one of the key factors that helped the AUD/USD pair to limit its deeper losses. In contrast to this, the losses in the AUD/USD pair could be short-lived as the risk-on market sentiment tends to underpin the riskier Australian dollar.
Impact of US Economic Data on AUD/USD Pair
The global market sentiment has been gaining positive momentum, buoyed by the recent release of lower-than-expected monthly Consumer Price Index and Retail Sales data in the United States (US). This has increased the likelihood of multiple rate cuts by the Federal Reserve (Fed) in 2024, which has in turn undermined the US Dollar (USD). The upbeat market sentiment and bearish US dollar both contribute to helping the AUD/USD pair regained its lost traction.
On the data front, the US Consumer Price Index (CPI) for April showed a slower rise of 0.3% from the previous month, below the expected 0.4%. Retail Sales remained flat, missing the anticipated 0.4% increase. The Producer Price Index (PPI) saw a stronger uptick of 0.5% compared to March's -0.1% decline, surpassing expectations. Core PPI, excluding food and energy prices, also rose by 0.5%, exceeding forecasts of 0.2%.
Therefore, the positive global market sentiment and weakening US dollar, fueled by lower-than-expected US economic data, helped the AUD/USD pair regain lost ground.
Negative Impact on AUD due to Cautious RBA Outlook and Mixed Employment Data
On the negative side, the Australian Dollar (AUD) lost ground recently due to a more cautious outlook from the Reserve Bank of Australia (RBA) about its monetary policies. This shift followed mixed employment data and slightly lower-than-expected wage increases in the first quarter, which contributed to a decrease in Australia’s 10-year government bond yield to around 4.2%. These factors create a dovish sentiment, putting pressure on the AUD/USD pair and ending its three-day winning streak.
On the data front, the Australian Bureau of Statistics reported that in April, the number of employed people in Australia increased by 38.5 thousand to reach 14.3 million, surpassing market expectations of 23.7 thousand and reversing a slight decline seen in March. However, the unemployment rate also rose to 4.1% from the previous 3.9%, marking the highest rate since January. This increase meant 30.3 thousand more individuals were unemployed, bringing the total to 604.2 thousand.
Therefore, the mixed data, with stronger employment figures but a higher unemployment rate, added to the cautious RBA stance, weighing on the AUD/USD pair and ending its recent gains.
AUD/USD - Technical Analysis
AUD/USD is currently trading at $0.66823, down 0.14% from the previous session. The pivot point is situated at $0.6714. Immediate resistance levels are at $0.6734, $0.6759, and $0.6779.
On the downside, immediate support levels are at $0.6649, $0.6614, and $0.6579. These levels are critical for traders as they indicate potential points of breakout or breakdown, guiding trading decisions.
The Relative Strength Index (RSI) is currently at 66, suggesting that the market is approaching overbought conditions. This could imply that a bearish correction is likely if buying pressure diminishes. The 50-day Exponential Moving Average (EMA) is at $0.6616, which supports the medium-term bullish trend.
Given these technical indicators, a strategic trading approach is advisable. Selling below the pivot point of $0.67126 could be beneficial, targeting a take-profit level of $0.66483 and setting a stop-loss at $0.67500.
This strategy hinges on the expectation that if AUD/USD fails to surpass the immediate resistance level, it may correct downward toward the support levels.
The RSI nearing overbought territory suggests that the current downward trend might continue if resistance levels hold. A failure to breach the resistance at $0.6734 could result in a pullback toward the support at $0.6649 or even lower.
Traders should remain vigilant for any shifts in market sentiment that could alter the trading landscape.
In summary, while AUD/USD is currently experiencing downward pressure, technical indicators suggest the possibility of further bearish movement. A strategic approach would be to sell below $0.67126 with a take-profit target at $0.66483 and a stop-loss at $0.67500.
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