AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD sees a minor decline to $0.64848, indicating slight bearish momentum.
- Key levels: Pivot at $0.6484 with resistance up to $0.6584 and support down to $0.6380.
- Neutral to bearish outlook suggested, with a strategic sell limit set at $0.65024.
The Australian Dollar versus the US Dollar (AUD/USD) has exhibited a slight downtrend in the recent 24-hour trading period, with a current price of $0.64848, marking a decrease of 0.10%. This subtle movement reflects the ongoing fluctuations in the forex market, influenced by a myriad of economic factors and investor sentiments globally.
At the heart of today's technical analysis, the pivot point sits at $0.6484, serving as a foundational marker for traders to gauge the currency pair's potential direction. Resistance levels are staged at $0.6511, $0.6553, and $0.6584, sequentially laying out the barriers for potential upward movements. Conversely, support levels are identified at $0.6441, $0.6412, and $0.6380, offering a cushion should the currency pair face downward pressure.
The Relative Strength Index (RSI) for AUD/USD stands at 45, indicating neither overbought nor oversold conditions, thus suggesting a state of equilibrium in market sentiment. The Moving Average Convergence Divergence (MACD) further enriches our analysis with a value of 0.0001 and a signal line at -0.0009, subtly hinting at potential upward momentum as the MACD line has just crossed above the signal line. The 50-day Exponential Moving Average (EMA), closely aligned with the current price at $0.6483, underscores a tight trading range, suggesting a market in search of direction.
Considering the nuanced interplay of key price levels and technical indicators, the AUD/USD pair presents a neutral to slightly bearish outlook. Investors might consider a strategic approach with a sell limit at $0.65024, targeting a take profit point at $0.64530, while placing a stop loss at $0.65247 to manage risk. This setup reflects a cautious but calculated response to the current market conditions, emphasizing the importance of vigilance and precision in forex trading.
AUD/USD - Trade Ideas
Entry Price – Sell Limit 0.65024
Take Profit – 0.64530
Stop Loss – 0.65247
Risk to Reward – 1: 2,2
Profit & Loss Per Standard Lot = +$663/ -$223
Profit & Loss Per Mini Lot = +$49/ -$22
AUD/USD Price Analysis – Feb 15, 2024
Daily Price Outlook
Despite the release of downbeat Australian Employment data, the AUD/USD currency pair managed to stop its downward trend and turned bullish around the 0.6501 level. However, the gains were mainly driven by the sluggish performance of the US dollar, which has been gaining traction in the wake of upbeat US macro data, along with hawkish remarks by several Federal Reserve (Fed) officials, but shortly it lost some of its traction amid sliding US Treasury yields.
Furthermore, Australia's Unemployment Rate rose to 4.1% from 3.9% prior, exceeding the expected 4.0% in January. This was seen as a key factor that kept the lid on any additional gains in the AUD/USD pair.
Australian Economic Developments and Impact on AUD/USD Pair
Despite the release of downbeat Australian employment data on Thursday, the AUD/USD currency pair gained positive momentum possibly due to the improved full-time employment and Governor Bullock's optimistic remarks about the global economy and inflation outlook. Meanwhile, the risk-on market sentiment has played a major role in underpinning the AUD/USD pair.
In January, Australia's seasonally adjusted employment change was only 0.5K, far below the market expectation of 30K. Part-time employment saw a decrease to 10.6K from the previous figure of 46.7K, while full-time employment improved to 11.1K from a significant decline in the previous month. The participation rate remained steady at 66.8%, slightly lower than anticipated.
Additionally, Australia's consumer inflation expectations for February remained unchanged at 4.5%. Governor Michele Bullock of the Reserve Bank of Australia expressed optimism about the global economy's performance, noting that concerns about potential hard landings and recessions have eased, and the economy is positioned to bring inflation down gradually.
Potential Impact of US Economic Indicators on AUD/USD Pair
On the US front, the broad-based US dollar failed to maintain its previous upward trend and faced challenges due to subdued US Treasury yields, signaling a shift in market sentiment. However, the expectations for no rate cuts by the Federal Reserve (Fed) in March surged to nearly 90%, which can help the dollar trim its losses. FedWatch Tool shows investors now anticipate a modest 37% probability of a rate cut in May, with a 53% likelihood of 25 basis points (bps) cut.
Fed Vice Chair Michael Barr reaffirmed confidence in US inflation's trajectory toward the Fed's 2% target. US headline Consumer Price Index (CPI) rose to 3.1% in January, exceeding the expected 2.9% but lower than the previous 3.4%. The higher-than-expected CPI suggests potential inflationary pressures, which could positively impact the dollar's value.
Therefore, the AUD/USD pair will experience upward pressure as subdued US Treasury yields and reduced expectations for Fed rate cuts weaken the US dollar, potentially benefiting the Australian dollar.
AUD/USD - Technical Analysis
The Australian Dollar versus the US Dollar (AUD/USD) has exhibited a slight downtrend in the recent 24-hour trading period, with a current price of $0.64848, marking a decrease of 0.10%. This subtle movement reflects the ongoing fluctuations in the forex market, influenced by a myriad of economic factors and investor sentiments globally.
At the heart of today's technical analysis, the pivot point sits at $0.6484, serving as a foundational marker for traders to gauge the currency pair's potential direction. Resistance levels are staged at $0.6511, $0.6553, and $0.6584, sequentially laying out the barriers for potential upward movements. Conversely, support levels are identified at $0.6441, $0.6412, and $0.6380, offering a cushion should the currency pair face downward pressure.
The Relative Strength Index (RSI) for AUD/USD stands at 45, indicating neither overbought nor oversold conditions, thus suggesting a state of equilibrium in market sentiment. The Moving Average Convergence Divergence (MACD) further enriches our analysis with a value of 0.0001 and a signal line at -0.0009, subtly hinting at potential upward momentum as the MACD line has just crossed above the signal line.
The 50-day Exponential Moving Average (EMA), closely aligned with the current price at $0.6483, underscores a tight trading range, suggesting a market in search of direction.
Considering the nuanced interplay of key price levels and technical indicators, the AUD/USD pair presents a neutral to slightly bearish outlook. Investors might consider a strategic approach with a sell limit at $0.65024, targeting a take profit point at $0.64530, while placing a stop loss at $0.65247 to manage risk.
This setup reflects a cautious but calculated response to the current market conditions, emphasizing the importance of vigilance and precision in forex trading.
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AUD/USD Price Analysis – Feb 13, 2024
Daily Price Outlook
Despite improved Australian Consumer Confidence data, the AUD/USD currency pair failed to stop its downward trend and remained well offered around the 0.6521 level. However, the downward trend was mainly driven by the renewed strength of the US dollar, which recently gained traction on upbeat US economic data and hawkish remarks by several Federal Reserve (Fed) officials. On the other hand, the inflation in Australia is slowing down, suggesting the Reserve Bank of Australia might stop raising interest rates. This is pushing the AUD/USD pair lower. In the meantime, the losses in the AUD/USD pair were further bolstered by the weaker Australian money market.
On the positive side, the release of improved Australian Consumer Confidence data was seen as a key factor that kept the lid on any additional losses in the AUD/USD pair. According to the Westpac-Melbourne Institute Consumer Sentiment index, consumer confidence jumped by 6.2% to 86 in February from 81 in January, its highest level in 20 months, but still below the neutral mark of 100 since February 2022.
Impact of Federal Reserve Caution on Interest Rates on AUD/USD Pair
It is worth noting that some Federal Reserve officials are leaning towards maintaining high interest rates for a longer period. Governor Adriana Kugler and Dallas Fed President Lorie K. Logan are hesitant to lower rates despite signs of slowing inflation. Minneapolis Fed President Kashkari also advises being careful, suggesting the possibility of two to three rate cuts in 2024 only if inflation trends are clearer. Boston Fed President Collins recognizes it is tough to reach the 2% inflation goal but needs more proof before thinking about lowering rates. Overall, the Fed is waiting for more inflation data to ensure a steady 2% inflation rate.
So, because some Fed officials are cautious about lowering interest rates, it will make the US dollar stronger compared to the AUD. This could affect the AUD/USD pair by potentially making the dollar more attractive due to expected higher interest rates in the US.
Downward Pressure on AUD/USD Amid Slowing Inflation and Potential Interest Rate Cuts
At home, the Australian Dollar is under pressure as inflation slows down, hinting that the Reserve Bank of Australia may be done raising interest rates. This is making the Australian Dollar weaker against the US Dollar. National Australia Bank's Business Confidence improved slightly, but Business Conditions dropped down. However, the Commonwealth Bank of Australia predicts interest rate cuts starting in September. Meanwhile, in China, consumer prices fell more than expected. All these factors are contributing to the Aussie Dollar's decline. Therefore, this suggests downward pressure on AUD/USD due to slowing inflation, potential interest rate cuts, and weaker business conditions.
AUD/USD - Technical Analysis
The Australian Dollar (AUD/USD) registers a slight decline of 0.17%, trading at 0.65190 as market participants adopt a cautious stance ahead of significant economic releases. On a four-hour chart, the currency pair confronts a pivotal point at 0.65343, indicating potential shifts in market dynamics. Resistance levels are identified at 0.65587, 0.65890, and 0.66245, delineating the thresholds for bullish momentum. Conversely, support is established at 0.65005, with additional levels at 0.64809 and 0.64529, suggesting areas where the currency may find footing in case of downward pressure.
Technical indicators, including a Relative Strength Index (RSI) of 48, depict a market in balance, neither overbought nor oversold. The 50-day Exponential Moving Average (EMA) closely aligns with the current price at 0.65160, further emphasizing the currency pair's equilibrium state.
Considering these factors, the outlook for AUD/USD remains cautiously bearish. A proposed sell limit at 0.65339 aims to capitalize on potential declines, with a target profit set at 0.65005 and a stop loss at 0.65501 to mitigate risks. This strategy reflects the nuanced trading environment, where investors are advised to monitor resistance and support closely, gauging the AUD/USD's direction amid evolving market sentiments.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD experiences a minor dip to 0.65190, facing a crucial pivot at 0.65343.
- Balanced RSI and EMA signal a neutral market, highlighting potential for strategic trades.
- Suggested approach: Sell at 0.65339, targeting 0.65005, with stop loss at 0.65501 for risk management.
The Australian Dollar (AUD/USD) registers a slight decline of 0.17%, trading at 0.65190 as market participants adopt a cautious stance ahead of significant economic releases. On a four-hour chart, the currency pair confronts a pivotal point at 0.65343, indicating potential shifts in market dynamics. Resistance levels are identified at 0.65587, 0.65890, and 0.66245, delineating the thresholds for bullish momentum. Conversely, support is established at 0.65005, with additional levels at 0.64809 and 0.64529, suggesting areas where the currency may find footing in case of downward pressure.
Technical indicators, including a Relative Strength Index (RSI) of 48, depict a market in balance, neither overbought nor oversold. The 50-day Exponential Moving Average (EMA) closely aligns with the current price at 0.65160, further emphasizing the currency pair's equilibrium state.
Considering these factors, the outlook for AUD/USD remains cautiously bearish. A proposed sell limit at 0.65339 aims to capitalize on potential declines, with a target profit set at 0.65005 and a stop loss at 0.65501 to mitigate risks. This strategy reflects the nuanced trading environment, where investors are advised to monitor resistance and support closely, gauging the AUD/USD's direction amid evolving market sentiments.
AUD/USD - Trade Ideas
Entry Price – Sell Limit 0.65339
Take Profit – 0.65005
Stop Loss – 0.65501
Risk to Reward – 1: 2
Profit & Loss Per Standard Lot = +$334/ -$162
Profit & Loss Per Mini Lot = +$33/ -$16
AUD/USD Price Analysis – Feb 08, 2024
Daily Price Outlook
Despite the risk-on market sentiment, the AUD/USD currency pair failed to stop its downward trend and lost some of its traction around the 0.6490 level. However, the declines were mainly driven by the renewed strength of the US dollar, which recently gained traction in the wake of upbeat US macro data, along with hawkish remarks by several Federal Reserve (Fed) officials. On the flip side, the Reserve Bank of Australia kept interest rates steady and hinted at potential future hikes, which is generally positive for the Australian dollar. This hawkish stance was seen as a key factor that kept the lid on any additional losses in the AUD/USD pair.
Influence of Fed Officials' Stance on AUD/USD Pair
Additionally, some Federal Reserve officials support the idea of keeping interest rates high for a longer time. Federal Reserve Governor Adriana Kugler mentioned that even though inflation seems to be slowing down, she's not ready to lower rates. Minneapolis Fed President Kashkari agrees, saying the Fed needs to be more sure about inflation trends before reducing rates, suggesting there might be two to three rate cuts in 2024. Boston Fed President Collins sees the chances of inflation going above 2% decreasing but admits there are challenges in reaching the target. She wants to see more evidence before thinking about rate cuts. Overall, the Fed is waiting for more inflation data to achieve its goal of a sustainable 2% inflation rate.
Therefore, the cautious stance of several Fed officials on interest rates may influence the AUD/USD pair by potentially strengthening the USD against the AUD due to higher expected interest rates in the US.
Impact of RBA Interest Rate Decision on AUD/USD Pair
Furthermore, the Reserve Bank of Australia (RBA) maintained the interest rate on Tuesday, suggesting a potential hike due to persistently high inflation. Traders in the futures market predict the first rate cut by the RBA may happen in September, rather than August. This positive outlook supports the Australian Dollar, providing momentum for the AUD/USD pair.
Therefore, the RBA's stance on potentially raising interest rates boosts the Australian Dollar, helping the AUD/USD pair to limit its losses.
AUD/USD - Technical Analysis
As the currency markets open on February 8th, the Australian Dollar against the US Dollar (AUD/USD) is trading marginally lower at $0.65181, reflecting a subtle 0.04% decline. The currency pair hovers near a pivotal point marked by the 50-Day Exponential Moving Average (EMA) at $0.65420, suggesting potential directional momentum.
The key technical pivot point for AUD/USD stands at $0.65182. This level is crucial as it signifies the balance of buyer and seller momentum. Should the pair ascend, immediate resistance is likely to be encountered at $0.65209, followed by $0.65248 and a more significant threshold at $0.65283. Conversely, should the pair trend downward, it may find support at $0.65151, with further potential cushions at $0.65100 and $0.65058.
With the Relative Strength Index (RSI) at a neutral 46.44, there is room for movement in either direction without immediate overbought or oversold concerns. The proximity of the current price to the 50 EMA suggests that there is a tussle between bearish and bullish sentiment, with the potential for a breakout.
For traders looking to capitalize on the AUD/USD pair's movements, a Sell Limit order at $0.65315 might be considered, targeting a Take Profit level at $0.64897, while maintaining a Stop Loss at $0.65622 to manage risk.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- The AUD/USD pair's movement around the 50 EMA hints at an upcoming trend decision.
- RSI levels indicate neither overbought nor oversold conditions, allowing for a range of trading strategies.
- Traders might anticipate modest fluctuations with the potential for a more decisive move following economic catalysts.
As the currency markets open on February 8th, the Australian Dollar against the US Dollar (AUD/USD) is trading marginally lower at $0.65181, reflecting a subtle 0.04% decline. The currency pair hovers near a pivotal point marked by the 50-Day Exponential Moving Average (EMA) at $0.65420, suggesting potential directional momentum.
The key technical pivot point for AUD/USD stands at $0.65182. This level is crucial as it signifies the balance of buyer and seller momentum. Should the pair ascend, immediate resistance is likely to be encountered at $0.65209, followed by $0.65248 and a more significant threshold at $0.65283. Conversely, should the pair trend downward, it may find support at $0.65151, with further potential cushions at $0.65100 and $0.65058.
With the Relative Strength Index (RSI) at a neutral 46.44, there is room for movement in either direction without immediate overbought or oversold concerns. The proximity of the current price to the 50 EMA suggests that there is a tussle between bearish and bullish sentiment, with the potential for a breakout.
For traders looking to capitalize on the AUD/USD pair's movements, a Sell Limit order at $0.65315 might be considered, targeting a Take Profit level at $0.64897, while maintaining a Stop Loss at $0.65622 to manage risk.
AUD/USD - Trade Ideas
Entry Price – Sell Limit 0.65315
Take Profit – 0.64897
Stop Loss – 0.65622
Risk to Reward – 1: 1.3
Profit & Loss Per Standard Lot = +$418/ -$307
Profit & Loss Per Mini Lot = +$41/ -$30
AUD/USD Price Analysis – Feb 06, 2024
Daily Price Outlook
The AUD/USD currency pair maintained its bullish bias and surged to the 0.6510 level. However, the reason for its upward trend can be attributed to the upbeat Australia's Retail Sales data, which tends to underpin the AUD currency and contribute to the AUD/USD pair gains. Furthermore, the Reserve Bank of Australia (RBA) maintained its Official Cash Rate (OCR) at 4.35% at February's meeting, as expected. The maintenance of the OCR at 4.35% by the RBA can be seen as positive news for the AUD because it indicates stability in monetary policy, which can attract investors and support the currency.
In contrast to this, upbeat US economy data and the hawkish comments from Federal Reserve (Fed) Chair Jerome Powell boosted the US dollar, which was seen as a key factor that capped further gains in the AUD/USD pair. Apart from this, the risk-off market sentiment, backed by the ongoing geopolitical tension in the Middle East and China's economy woes, was seen as another key factor that kept the lid on any additional gains in the AUD/USD pair.
RBA's Cautious Approach and its Potential Impact on AUD/USD Pair
It is worth noting that the latest Retail Sales data in Australia showed a slight uptick of 0.3% in the fourth quarter, indicating a modest improvement compared to the previous growth. However, Australia is currently facing a significant cost-of-living crisis, which poses challenges for the Reserve Bank of Australia (RBA) in terms of further interest rate hikes.Investors are eagerly waiting for RBA Governor Michele Bullock's speech to understand what the central bank might do next. Bullock said the bank is considering different ways to manage the economy and is watching inflation closely.
Consequently, this news could positively affect the AUD/USD pair as the RBA's cautious approach may stabilize the Australian economy, boosting investor confidence and potentially strengthening the Australian dollar against the US dollar.
Impact of Federal Reserve's Hawkish Stance on AUD/USD Pair
Furthermore, the broad-based US Dollar maintained its position near a three-month high after the Federal Reserve adopted a hawkish stance, supported by strong ISM Services data for January. Notably, the ISM Services PMI exceeded expectations, reaching 53.4, above both the consensus of 52.0 and the previous month's 50.5. Federal Reserve Chair Jerome Powell's remarks, emphasizing the importance of closely monitoring inflation's movement toward the 2% target, reduced expectations of rate cuts, further bolstering the dollar.
Therefore this news likely led to a decline in the AUD/USD pair due to the US Dollar's strength following the Federal Reserve's hawkish stance and positive ISM Services data, coupled with rising US Treasury yields.
AUD/USD - Technical Analysis
The Australian dollar edged up against its US counterpart, with the AUD/USD pair noting a modest rise of 0.16% to $0.64930 as of February 6. The currency pair has seen a slight lift in the 4-hour chart, reflecting a tempered but positive sentiment among traders.
The pivot point for the session is set at $0.6426, marking the immediate baseline for any shifts in market dynamics. Resistance levels are charted at $0.6471, followed by $0.6548 and $0.6588, which could serve as ceilings in the pair's upward trajectory. Supports are delineated at $0.6346, $0.6272, and $0.6195, potentially halting any bearish pullback.
The Relative Strength Index (RSI) at 37 indicates a market that is neither overbought nor oversold, leaving room for potential price swings in either direction. The Moving Average Convergence Divergence (MACD) presents a value of -0.00040 with its signal at -0.00243, implying that the negative momentum is abating, as the MACD line is closer to crossing above the signal line, potentially signaling an upcoming bullish phase.
The 50-day Exponential Moving Average (EMA) stands at $0.6502, just above the current price, suggesting a very tight trading range with the potential for the currency to oscillate around this key moving average.
In light of these observations, the overall technical outlook for the AUD/USD appears cautiously optimistic, with a strategy to buy above $0.64999, targeting profits at $0.65437, and placing a stop loss at $0.64674 to manage risk.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD sees a gain to $0.64930, with potential upward momentum as indicated by the pivot at $0.6426 and resistance levels ahead.
- RSI and MACD indicate potential for a positive reversal, with the latter nearing a bullish crossover.
- A tight trading strategy suggests entering long positions above $0.64999, with a stop loss at $0.64674 to secure gains at $0.65437.
The Australian dollar edged up against its US counterpart, with the AUD/USD pair noting a modest rise of 0.16% to $0.64930 as of February 6. The currency pair has seen a slight lift in the 4-hour chart, reflecting a tempered but positive sentiment among traders.
The pivot point for the session is set at $0.6426, marking the immediate baseline for any shifts in market dynamics. Resistance levels are charted at $0.6471, followed by $0.6548 and $0.6588, which could serve as ceilings in the pair's upward trajectory. Supports are delineated at $0.6346, $0.6272, and $0.6195, potentially halting any bearish pullback.
The Relative Strength Index (RSI) at 37 indicates a market that is neither overbought nor oversold, leaving room for potential price swings in either direction. The Moving Average Convergence Divergence (MACD) presents a value of -0.00040 with its signal at -0.00243, implying that the negative momentum is abating, as the MACD line is closer to crossing above the signal line, potentially signaling an upcoming bullish phase.
The 50-day Exponential Moving Average (EMA) stands at $0.6502, just above the current price, suggesting a very tight trading range with the potential for the currency to oscillate around this key moving average.
In light of these observations, the overall technical outlook for the AUD/USD appears cautiously optimistic, with a strategy to buy above $0.64999, targeting profits at $0.65437, and placing a stop loss at $0.64674 to manage risk.
AUD/USD - Trade Ideas
Entry Price – Buy Above 0.64999
Take Profit – 0.65437
Stop Loss – 0.64674
Risk to Reward – 1: 1.35
Profit & Loss Per Standard Lot = +$438/ -$325
Profit & Loss Per Mini Lot = +$43/ -$32
AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD at 0.65660, down 0.01%; pivot point at 0.6545 with bearish indicators.
- Resistance levels at 0.6583, 0.6615; support at 0.6514, suggesting cautious sentiment.
- RSI at 42, MACD negative; suggest selling below 0.65619, with targets and stop loss set.
The AUD/USD pair, on February 1st, exhibits a slight downtrend, trading at 0.65660, marking a marginal decrease of 0.01%. This subtle movement points towards a cautious market sentiment, as traders navigate through the key technical levels identified for this currency pair.
The technical landscape outlines a pivot point at 0.6545, suggesting an immediate battleground for bulls and bears. Resistance levels are set at 0.6583, 0.6615, and 0.6653, each representing potential reversal points in the short-term bullish scenario. Conversely, support is found at 0.6514, with further floors at 0.6475 and 0.6436, crucial for holding the pair in a downtrend.
The Relative Strength Index (RSI) stands at 42, indicating a lean towards bearish momentum without reaching oversold conditions. The Moving Average Convergence Divergence (MACD) underscores this sentiment, with a value of -0.00054 beneath the signal line of -0.00035, hinting at potential downward momentum.
The 50-day Exponential Moving Average (EMA) at 0.6578 currently hovers above the market price, suggesting a resistance level that could curb upward movements. An observed breakout from the upward channel around the 0.6575 level hints at bearish potential, particularly if a bearish engulfing pattern forms below this threshold.
In summary, the AUD/USD pair's current stance is cautiously bearish, with a recommended sell entry below 0.65619. Traders might target a take-profit level at 0.65256, while a stop loss at 0.65886 could mitigate potential losses. This outlook encapsulates a strategic approach to trading the AUD/USD, considering the prevailing technical indicators and market dynamics.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.65619
Take Profit – 0.65256
Stop Loss – 0.65886
Risk to Reward – 1: 1.3
Profit & Loss Per Standard Lot = +$363/ -$267
Profit & Loss Per Mini Lot = +$36/ -$26
AUD/USD Price Analysis – Feb 01, 2024
Daily Price Outlook
The AUD/USD currency pair continued its downward trend and remained well offered around the $0.6527 level. However, the reason for this decline can be attributed to downbeat Australian data, which undermined the Australian dollar and contributed to losses in the AUD/USD pair. Furthermore, the bullish US dollar, backed by Fed Chair Powell's hawkish comments, played a significant role in supporting the downward movement of the AUD/USD currency pair.
Australian Dollar Challenges Amidst RBA's Potential Interest Rate Cuts
It's important to highlight that Australia's dollar has been facing challenges due to rising expectations of early interest rate cuts by the Reserve Bank of Australia (RBA). This follows a weaker-than-expected quarterly inflation report. Although the RBA is likely to maintain the cash rate at 4.35% in February, bond traders are pricing in two quarter-point reductions in 2024, starting possibly in August.
Moreover, National Australia Bank's Business Confidence for Q4 decreased to -6, indicating a decline in business sentiment. Building Permits (MoM) also fell by 9.5% in December, contrasting with the expected growth of 1.1%. In China, the Caixin Manufacturing PMI for January held steady at 50.8, slightly exceeding the anticipated 50.6 reading.
Australia's Monthly Consumer Price Index (CPI) reported a year-on-year increase of 3.4% in December, lower than both November's 4.3% and the expected 3.7%. RBA Trimmed Mean CPI (YoY) for Q4 decreased to 4.2%, below the previous 5.2% and the expected 4.3%. Additionally, the Australian CPI (QoQ) figure for December was 0.6%, softer than the expected 0.8% and a notable drop from the previous 1.2%.
US Dollar Strength and Challenges for AUD/USD Amid Economic Indicators and Global Tensions
Moreover, the US Dollar initially faced losses due to disappointing employment figures but rebounded after hawkish comments from Fed Chair Powell. Increasing US Treasury yields further supported the USD. In the meantime, the heightened tensions in the Middle East, causing increased risk aversion, also contributed to the Dollar's strength, posing a challenge for the AUD/USD pair.
It should be noted that the US ADP Employment Change fell short at 107K in January, below the expected 145K. Despite a decrease in yields, the US Treasury remains sustainable since October 2023, with stronger economic growth improving tax receipts. The US plans to borrow $760 billion in Q1, lower than the October estimate of $816 billion. The Employment Cost Index eased to 0.9% in Q4, below the expected 1.0%. The Chicago Purchasing Managers' Index was 46 in January, missing the expected increase, and US JOLTS Job Openings improved to 9.026M in December, surpassing the anticipated 8.75M. The US Housing Price Index (MoM) remained unchanged at 0.3% in November.
AUD/USD - Technical Analysis
The AUD/USD pair, on February 1st, exhibits a slight downtrend, trading at 0.65660, marking a marginal decrease of 0.01%. This subtle movement points towards a cautious market sentiment, as traders navigate through the key technical levels identified for this currency pair.
The technical landscape outlines a pivot point at 0.6545, suggesting an immediate battleground for bulls and bears. Resistance levels are set at 0.6583, 0.6615, and 0.6653, each representing potential reversal points in the short-term bullish scenario. Conversely, support is found at 0.6514, with further floors at 0.6475 and 0.6436, crucial for holding the pair in a downtrend.
The Relative Strength Index (RSI) stands at 42, indicating a lean towards bearish momentum without reaching oversold conditions. The Moving Average Convergence Divergence (MACD) underscores this sentiment, with a value of -0.00054 beneath the signal line of -0.00035, hinting at potential downward momentum.
The 50-day Exponential Moving Average (EMA) at 0.6578 currently hovers above the market price, suggesting a resistance level that could curb upward movements. An observed breakout from the upward channel around the 0.6575 level hints at bearish potential, particularly if a bearish engulfing pattern forms below this threshold.
In summary, the AUD/USD pair's current stance is cautiously bearish, with a recommended sell entry below 0.65619. Traders might target a take-profit level at 0.65256, while a stop loss at 0.65886 could mitigate potential losses. This outlook encapsulates a strategic approach to trading the AUD/USD, considering the prevailing technical indicators and market dynamics.
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