AUD/USD Price Analysis – Jan 30, 2024
Daily Price Outlook
The AUD/USD currency pair maintained its upward rally and remained well bid above the 0.6615 level. However, the reason for its upward trend can be attributed to upbeat Australia's Manufacturing PMI data, which increased from 47.6 to 50.3, showcasing improvement. Meanwhile, the sluggish performance of the US dollar was seen as another key factor that kept the AUD/USD pair higher. Investors are keeping an close eye on the Federal Open Market Committee (FOMC) statement scheduled for Wednesday, January 31.
Retail Sales Drop Amidst Positive Indicators and AUD Resilience
It is worth noting that Australia's Retail Sales for December unexpectedly dropped by 2.7%, oppose from the predicted 0.9% decrease. This marked a significant shift from the previous 2.0% growth. Interestingly, the Australian Dollar strengthened despite this disappointing consumer spending news. However, the resilience of the AUD can be linked to upbeat Australia's Manufacturing PMI and positive vibes surrounding additional stimulus measures in China, influencing the AUD/USD pair.
On a positive note, Australia's Manufacturing PMI rose from 47.6 to 50.3, indicating improvement. The Services PMI also saw an increase from 47.1 to 47.9, and the Composite PMI rose to 48.1 from December's 46.9. Additionally, the Reserve Bank of Australia's Bulletin suggests that businesses foresee a moderation in price growth over the last six months, expecting prices to stay above the RBA's inflation target range of 2.0–3.0%. Looking ahead, the focus is on Australia's Consumer Price Index (CPI) data expected on Wednesday, projecting a Q4 decline of 0.8% from the previous 1.2%.
Despite Australia's Retail Sales decline, the AUD/USD pair strengthened, likely influenced by positive sentiments from China's additional stimulus.
USD Stability, Rate Cut Expectations, and Global Tensions Impact AUD/USD Pair
Moreover, the broad-based US Dollar showed mixed performance and rebounded slightly after a slight dip on Monday, thanks to a more cautious market mood. However, concerns about potential US military action in response to a drone attack in Jordan could escalate geopolitical tension, which could increase risk aversion and undermine the riskier asset AUD. Investors are eagerly awaiting Wednesday's Federal Open Market Committee (FOMC) statement, expecting the Fed Funds rate to remain at 5.25-5.50%. There's a growing belief in a possible rate cut in March, impacting the US Dollar (USD).
In economic news, the US Core PCE for December matched expectations with a 0.2% monthly increase. However, the yearly Core PCE slightly fell short at 2.9%, below the expected 3.0%. Moreover, the Q4 US Gross Domestic Product Annualized surpassed market expectations, reporting a 3.3% reading compared to the previous 4.9%.
Therefore, the US economic updates, including a matched Core PCE for December and better-than-expected Q4 GDP, may strengthen the USD, potentially impacting the AUD/USD pair.
AUD/USD - Technical Analysis
In the current forex market landscape, the AUD/USD pair, as of January 30, is exhibiting subtle changes, trading at 0.66066, marking a marginal decline of 0.01%. Analyzing the 4-hour chart provides insights into the currency pair's technical outlook, highlighting key levels that are of significant interest to traders.
The pivot point, a crucial technical indicator, is set at 0.6583. This serves as a baseline for the day's trading bias. Resistance levels are mapped out at 0.6615, 0.6654, and 0.6685. These levels are essential for traders to watch, as they represent potential ceilings where selling pressure might intensify, thereby capping upward movements. Conversely, support levels are identified at 0.6543, 0.6512, and 0.6475. These points could provide relief in case of a downward trend, offering opportunities for buyers to step in.
The Relative Strength Index (RSI) is at 54, indicating a relatively neutral market momentum with a slight inclination towards bullish sentiment. The Moving Average Convergence Divergence (MACD) shows a value of 0.0005 above its signal line at 0.0003, suggesting the potential for an upward trend. Furthermore, the 50-Day Exponential Moving Average (EMA) is currently at 0.6601, closely aligning with the current price level, adding to the stability of the current trend.
An upward channel pattern is observed in the chart, which typically indicates a sustained bullish trend. This pattern suggests that the AUD/USD pair might continue its upward trajectory, supported by the current technical indicators.
A buy limit order at 0.66064 with a take-profit target at 0.66491 and a stop-loss set at 0.65737 could be a strategic approach to capitalize on the current market conditions.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- The AUD/USD pair is showing a stable but slightly bullish trend at 0.66066.
- Key resistance at 0.6615 and 0.6654; support at 0.6543 and 0.6512.
- Technical indicators and chart patterns support a potential buying trend.
In the current forex market landscape, the AUD/USD pair, as of January 30, is exhibiting subtle changes, trading at 0.66066, marking a marginal decline of 0.01%. Analyzing the 4-hour chart provides insights into the currency pair's technical outlook, highlighting key levels that are of significant interest to traders.
The pivot point, a crucial technical indicator, is set at 0.6583. This serves as a baseline for the day's trading bias. Resistance levels are mapped out at 0.6615, 0.6654, and 0.6685. These levels are essential for traders to watch, as they represent potential ceilings where selling pressure might intensify, thereby capping upward movements. Conversely, support levels are identified at 0.6543, 0.6512, and 0.6475. These points could provide relief in case of a downward trend, offering opportunities for buyers to step in.
The Relative Strength Index (RSI) is at 54, indicating a relatively neutral market momentum with a slight inclination towards bullish sentiment. The Moving Average Convergence Divergence (MACD) shows a value of 0.0005 above its signal line at 0.0003, suggesting the potential for an upward trend. Furthermore, the 50-Day Exponential Moving Average (EMA) is currently at 0.6601, closely aligning with the current price level, adding to the stability of the current trend.
An upward channel pattern is observed in the chart, which typically indicates a sustained bullish trend. This pattern suggests that the AUD/USD pair might continue its upward trajectory, supported by the current technical indicators.
A buy limit order at 0.66064 with a take-profit target at 0.66491 and a stop-loss set at 0.65737 could be a strategic approach to capitalize on the current market conditions.
AUD/USD - Trade Ideas
Entry Price – Buy Limit 0.66064
Take Profit – 0.66491
Stop Loss – 0.65737
Risk to Reward – 1: 1.3
Profit & Loss Per Standard Lot = +$427/ -$327
Profit & Loss Per Mini Lot = +$42/ -$32
AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD slightly down at 0.65745; pivot point at $0.6516 indicates balance.
- Key resistances at $0.6609, $0.6695; supports at $0.6427, $0.6334.
- RSI at 45 and MACD near zero; suggesting neutral to slight bearish trend.
In the current forex landscape, the AUD/USD pair is showing a marginal decline, trading at 0.65745, down by 0.04%. The pair's technical outlook hinges around the pivot point at $0.6516, which serves as a crucial indicator of the pair's short-term directional bias.
Resistance levels for the AUD/USD are set at $0.6609, $0.6695, and $0.6791. These levels represent potential ceilings where selling pressure might intensify. On the downside, immediate support is found at $0.6427, with further cushions at $0.6334 and $0.6239, acting as safety nets against bearish movements.
The Relative Strength Index (RSI) at 45 suggests a neutral market sentiment. Meanwhile, the Moving Average Convergence Divergence (MACD) stands at 0.0 with its signal line at -0.00027, indicating a possible shift in momentum. The 50-Day Exponential Moving Average (EMA) is currently at $0.6585, slightly above the current market price.
Considering these indicators, the overall trend for the AUD/USD seems to be tilting towards neutrality with a slight bearish inclination. A prudent trading strategy could be to set a sell limit at 0.65970, with a take profit target at 0.65307 and a stop loss at 0.66361, carefully balancing potential risks and rewards.
AUD/USD - Trade Ideas
Entry Price – Sell Limit 0.65970
Take Profit – 0.65307
Stop Loss – 0.66361
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$663/ -$391
Profit & Loss Per Mini Lot = +$66/ -$39
AUD/USD Price Analysis – Jan 25, 2024
Daily Price Outlook
Despite the bullish US dollar, the AUD/USD currency pair managed to halt its downward trend and attracted some modest bids around the $0.6580 level. The upward movement can be attributed to the release of improved preliminary Purchasing Managers Index (PMI) data from Australia on Wednesday.
In contrast to this, the release of positive S&P Global Purchasing Managers Index (PMI) data from the United States could decrease the probability of rate cuts by the Federal Reserve (Fed) in March. This, in turn, could boost the US dollar and cap gains in the AUD/USD pair.
RBA Economic Signals and Mixed Data Impact on AUD/USD Pair
It's worth noting that the Reserve Bank of Australia's (RBA) Bulletin indicates that businesses expect a slowdown in price growth over the next six months. They anticipate prices to remain above the RBA's target range of 2.0–3.0%. Meanwhile, the Manufacturing PMI rose from 47.6 to 50.3, signaling improvement, while the Services PMI increased from 47.1 to 47.9. The Composite PMI also went up to 48.1. However, Australia's Westpac Leading Index decreased by 0.03% in December.
In the meantime, National Australia Bank's Business Conditions slightly dropped to 7 in December, while Business Confidence improved to -1. Australia’s Consumer Inflation Expectations held steady at 4.5% in January. However, the Chair of Australia's sovereign wealth fund, Peter Costello, mentioned that inflation is showing early signs of moderation, but there's still work to be done to bring prices back within the RBA's target band.
Therefore, the RBA's indication of a slowdown in price growth, along with mixed economic data, could create uncertainty for the AUD/USD pair. Traders may watch closely for further developments in inflation and business conditions.
US Dollar's Recovery and Challenges Amidst Risk-On Market Sentiment
Moreover, the US Dollar is trying to bounce back despite lower US Treasury yields. However, the US Dollar (USD) faces challenges due to a risk-on market sentiment ahead of the Federal Reserve's (Fed) January 31 interest rate decision. Investors are eyeing Thursday's preliminary US Gross Domestic Product Annualized release, expected to show a Q4 reading of 2.0%, down from the previous 4.9%. This data offers insights into overall economic performance, impacting market expectations on the Fed's monetary policy stance.
Notably, positive US S&P Global Manufacturing and Services PMI, along with an improved Consumer Sentiment Index, help the US dollar regain its strength, which is seen as a key factor that could cap further gains in the AUD/USD pair.
AUD/USD - Technical Analysis
In the current forex landscape, the AUD/USD pair is showing a marginal decline, trading at 0.65745, down by 0.04%. The pair's technical outlook hinges around the pivot point at $0.6516, which serves as a crucial indicator of the pair's short-term directional bias.
Resistance levels for the AUD/USD are set at $0.6609, $0.6695, and $0.6791. These levels represent potential ceilings where selling pressure might intensify. On the downside, immediate support is found at $0.6427, with further cushions at $0.6334 and $0.6239, acting as safety nets against bearish movements.
The Relative Strength Index (RSI) at 45 suggests a neutral market sentiment. Meanwhile, the Moving Average Convergence Divergence (MACD) stands at 0.0 with its signal line at -0.00027, indicating a possible shift in momentum. The 50-Day Exponential Moving Average (EMA) is currently at $0.6585, slightly above the current market price.
Considering these indicators, the overall trend for the AUD/USD seems to be tilting towards neutrality with a slight bearish inclination. A prudent trading strategy could be to set a sell limit at 0.65970, with a take profit target at 0.65307 and a stop loss at 0.66361, carefully balancing potential risks and rewards.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD ascends modestly, pivotal at $0.6610; RSI balanced, MACD indicates slight bullishness.
- Resistance and support levels identified; 50-day EMA underpins current prices.
- Market sentiment cautiously optimistic; trading strategy reflects potential bearish retraction.
The Australian dollar exhibits buoyancy, appreciating by 0.49% to 0.66011 against the US dollar. This uptick places the AUD/USD pair above the pivotal $0.6610 mark, which could act as a springboard for further gains. The pair faces successive resistance levels at $0.6695, $0.6792, and $0.6877 that may stall the climb. Conversely, supports at $0.6513, $0.6428, and $0.6331 provide layers of defense against declines.
The RSI indicator reads at 53, signaling neither overbought nor oversold conditions, suggesting equilibrium in buying and selling pressures. The MACD hovers at 0.00045, just breaching its signal line, hinting at possible upward momentum for the currency pair, albeit the crossover is minimal and warrants confirmation for a solid trend.
The 50-day EMA at $0.6588 currently supports the price, potentially reinforcing the uptrend. However, chart patterns do not offer a clear direction at present, leaving the next significant move open to interpretation. Given these factors, a conservative approach suggests potential for a bearish reversion below $0.6610, recommending a sell below 0.66172, with a take-profit at 0.65702 and a stop-loss at 0.66432.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.66172
Take Profit – 0.65702
Stop Loss – 0.66432
Risk to Reward – 1: 1.3
Profit & Loss Per Standard Lot = +$470/ -$260
Profit & Loss Per Mini Lot = +$47/ -$26
AUD/USD Price Analysis – Jan 23, 2024
Daily Price Outlook
Despite the bullish US dollar, the AUD/USD currency pair has maintained its upward trend and remained well bid around the 0.6588 level. The reason for this upward trend can be attributed to the improved National Australia Bank's Business Confidence. The enhanced Business Confidence from the National Australia Bank might have contributed to supporting the Aussie Dollar. Additionally, the Australian Dollar could find support from the improved performance of Australia's share market. In contrast, the US Dollar (USD) managed to strengthen despite lower US Treasury yields, exerting some pressure on the AUD/USD pair.
Australian Economic Landscape and RBA Speculations Impacting AUD/USD Pair
It's worth noting that Australia's currency is facing challenges due to speculation about potential early interest rate cuts by the Reserve Bank of Australia (RBA). This speculation arises from recent indicators like lower Aussie Consumer Confidence and Employment Change figures, raising concerns about the economic outlook.
Australia's sovereign wealth fund Chair, Peter Costello, mentioned that inflation in Australia is showing early signs of slowing down. However, he highlights that there's still a long way to go to bring prices back within the RBA's target range of 2.0% to 3.0%. Despite a slight dip in National Australia Bank's Business Conditions, Business Confidence improved.
Australia's Consumer Inflation Expectations remained stable at 4.5% in January. Meanwhile, the People's Bank of China maintained its Loan Prime Rate unchanged for both one-year and five-year terms. The rates remain at 3.45% for one year and 4.20% for five years.
Therefore, the speculation on early interest rate cuts by the RBA, coupled with concerns about economic indicators, may weigh on the AUD/USD pair. Improved business confidence and stable inflation expectations offer some support amid uncertainties.
US Fed Stance and Economic Indicators: Potential Impacts on USD and AUD/USD Pair
Furthermore, San Francisco Fed President Mary Daly believes there's still significant work to be done in bringing inflation back to the 2.0% target. She made it clear that considering interest-rate cuts right now is premature. Similarly, Atlanta Fed President Raphael Bostic, before the upcoming rate meeting on January 31, reiterated his stance on potential rate cuts.
Bostic emphasized being open to adjusting his outlook based on data, highlighting the Fed's data-dependent approach. In economic news, the preliminary US Michigan Consumer Sentiment Index for January exceeded expectations, rising to 78.8 from 69.7. On the housing front, US Existing Home Sales decreased by 1.0% in December, while Housing Starts surpassed expectations, reaching 1.46 million.
Therefore, the cautious stance on rate cuts from US Fed officials, coupled with positive consumer sentiment, might support the USD against the AUD. However, housing data variations could introduce some volatility to the AUD/USD pair.
AUD/USD - Technical Analysis
The Australian dollar exhibits buoyancy, appreciating by 0.49% to 0.66011 against the US dollar. This uptick places the AUD/USD pair above the pivotal $0.6610 mark, which could act as a springboard for further gains. The pair faces successive resistance levels at $0.6695, $0.6792, and $0.6877 that may stall the climb. Conversely, supports at $0.6513, $0.6428, and $0.6331 provide layers of defense against declines.
The RSI indicator reads at 53, signaling neither overbought nor oversold conditions, suggesting equilibrium in buying and selling pressures. The MACD hovers at 0.00045, just breaching its signal line, hinting at possible upward momentum for the currency pair, albeit the crossover is minimal and warrants confirmation for a solid trend.
The 50-day EMA at $0.6588 currently supports the price, potentially reinforcing the uptrend. However, chart patterns do not offer a clear direction at present, leaving the next significant move open to interpretation. Given these factors, a conservative approach suggests potential for a bearish reversion below $0.6610, recommending a sell below 0.66172, with a take-profit at 0.65702 and a stop-loss at 0.66432.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD edges up to 0.65488, facing resistance at 0.6600 and support at 0.6510.
- Oversold RSI at 30; AUD/USD may rebound from double bottom support at 0.6530.
- AUD/USD trading near 50 EMA at 0.6566; key resistance and support levels in focus.
As of January 18, the AUD/USD pair has shown a slight uptick, currently trading at 0.65488, marking a 0.10% increase. On a 4-hour chart, the currency pair presents a pivot point at 0.6557. Looking ahead, AUD/USD faces immediate resistance at 0.6600, with subsequent levels at 0.6645 and 0.6689. Conversely, support is found at 0.6510, followed by 0.6464 and 0.6730.
The Relative Strength Index (RSI) stands at 30, suggesting the pair may be entering an oversold territory, potentially leading to a bounce. The Moving Average Convergence Divergence (MACD) shows a value of -0.0002 with a signal line at -0.0036, hinting at possible downward momentum. However, the pair needs to break past key levels for a clearer direction.
The 50-Day Exponential Moving Average (EMA) is currently positioned at 0.6566, hovering near the pair’s current trading level and might act as a dynamic resistance. A notable chart pattern for AUD/USD is the double bottom support around the 0.6530 level, suggesting potential for a reversal if the pair holds this support.
The overall trend for AUD/USD appears to be in a crucial phase. For traders, a potential entry point could be at a buy limit of 0.65302, with a take-profit target set at 0.65981 and a stop loss at 0.64956. In the short term, the currency pair is expected to test its resistance levels, particularly if it surpasses its immediate pivot point.
AUD/USD - Trade Ideas
Entry Price – Buy Limit 0.65302
Take Profit – 0.65981
Stop Loss – 0.64956
Risk to Reward – 1: 1.9
Profit & Loss Per Standard Lot = +$679/ -$346
Profit & Loss Per Mini Lot = +$67/ -$34
AUD/USD Price Analysis – Jan 18, 2024
Daily Price Outlook
Despite the decline in Employment Change and the bullish US dollar, the AUD/USD currency pair maintained its bullish bias and remained well bid around the 0.6564 level. The upward trend can be attributed to the stability in Australian Consumer Inflation Expectations and the Unemployment Rate meeting expectations, providing some relief to the Australian dollar. In contrast to this, the US military's execution of another series of strikes on Houthi targets in Yemen heightened geopolitical tensions, bolstering the risk-off market sentiment and undermining the riskier Australian dollar. This was seen as a key factor that kept a lid on any additional gains in the AUD/USD pair.
Australian Economic Indicators and Mixed Chinese Data
It's worth noting that Australia's recent economic data failed to give much support to the Australian Dollar. In January, Consumer Inflation Expectations and the Unemployment Rate held steady, but Employment Change took a hit, falling by 65.1K instead of the expected increase of 17.6K. Additionally, Consumer Confidence dropped by 1.3%, contrasting with the previous 2.7% rise. On a positive note, Australian TD Securities inflation rose to 5.2% YoY in December.
Meanwhile, China's economic indicators showed mixed results. Annual GDP growth was 5.2%, slightly below the expected 5.3%. Industrial Production beat expectations at 6.8%, but Retail Sales fell short at 7.4% YoY. Premier Li Qiang mentioned that China's economy grew around 5.2% in 2023.
Therefore, Australia's weak economic data, coupled with China's mixed indicators, may pressure the AUD/USD pair as the declining employment and consumer confidence in Australia, along with China's slightly below-expected GDP, could weigh on the Australian Dollar.
Factors Influencing the US Dollar and Pressuring the AUD/USD Pair
In addition, the US Dollar Index (DXY) retreated from a five-week high at 103.69 due to lower US Treasury yields following Wednesday's economic data. US Retail Sales in December surpassed expectations, registering a 0.6% increase. The positive momentum extended to the Retail Sales Control Group, which rose by 0.8%, and Retail Sales excluding Autos, growing by 0.4% and surpassing the anticipated 0.2%.
Investor sentiment favored the US Dollar, decreasing the probability of a March rate cut by the Federal Reserve from over 70% to 57%. Federal Reserve officials, including Christopher Waller and Raphael Bostic, underscored the importance of caution and cautioned against premature rate cuts. Additionally, the US NY Empire State Manufacturing Index dropped to -43.7 in January, falling short of expectations.
Therefore, the positive US economic data, lower chance of a March rate cut, and caution from Federal Reserve officials strengthened the US Dollar. This likely pressured the AUD/USD pair, causing a potential decline.
AUD/USD - Technical Anaylsis
As of January 18, the AUD/USD pair has shown a slight uptick, currently trading at 0.65488, marking a 0.10% increase. On a 4-hour chart, the currency pair presents a pivot point at 0.6557. Looking ahead, AUD/USD faces immediate resistance at 0.6600, with subsequent levels at 0.6645 and 0.6689. Conversely, support is found at 0.6510, followed by 0.6464 and 0.6730.
The Relative Strength Index (RSI) stands at 30, suggesting the pair may be entering an oversold territory, potentially leading to a bounce. The Moving Average Convergence Divergence (MACD) shows a value of -0.0002 with a signal line at -0.0036, hinting at possible downward momentum. However, the pair needs to break past key levels for a clearer direction.
The 50-Day Exponential Moving Average (EMA) is currently positioned at 0.6566, hovering near the pair’s current trading level and might act as a dynamic resistance. A notable chart pattern for AUD/USD is the double bottom support around the 0.6530 level, suggesting potential for a reversal if the pair holds this support.
The overall trend for AUD/USD appears to be in a crucial phase. For traders, a potential entry point could be at a buy limit of 0.65302, with a take-profit target set at 0.65981 and a stop loss at 0.64956. In the short term, the currency pair is expected to test its resistance levels, particularly if it surpasses its immediate pivot point.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD falls to 0.66128, facing a bearish trend within a downward channel.
- Technical indicators suggest oversold conditions, with RSI at 28 and MACD near flat.
- Traders could consider a bearish stance with specified entry, profit, and stop loss levels.
On January 16th, the Australian Dollar (AUD/USD) exhibited a notable decline, dropping by 0.71% to a current level of 0.66128. The 4-hour chart analysis reveals a pivot point at 0.6557. The AUD faces immediate resistance at 0.6602, followed by 0.6644 and 0.6688. On the downside, support levels are identified at 0.6509, 0.6466, and a seemingly out-of-place 0.6734, which may need correction.
The Relative Strength Index (RSI) is notably low at 28, indicating that the AUD/USD is potentially oversold. The Moving Average Convergence Divergence (MACD) shows a value of -0.001, with the signal line at -0.00182, suggesting a lack of strong directional momentum. The 50-day and 200-day Exponential Moving Averages (EMAs) are at 0.6654, further indicating potential resistance points.
A key pattern on the chart is a downward channel, reinforcing a bearish sentiment for the AUD, particularly below the 0.66333 mark. This trend suggests that the AUD is currently in a selling mode.
In conclusion, the short-term outlook for the AUD/USD pair appears bearish. Traders might consider a sell limit at 0.66333, with a take profit target near 0.6509 and a stop loss around 0.6688. However, given the oversold conditions, caution is advised as reversals are possible, especially if the pair tests and breaks above key resistance levels.
AUD/USD - Trade Ideas
Entry Price – Sell Limit 0.66333
Take Profit – 0.65752
Stop Loss – 0.66675
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$581/ -$342
Profit & Loss Per Mini Lot = +$58/ -$34
AUD/USD Price Analysis – Jan 16, 2024
Daily Price Outlook
The AUD/USD currency pair failed to halt its downward trend and remained well offered around the $0.6616 level. However, the reason for its decline can be attributed to the bullish US dollar and downbeat Australian data. The pair faces downward pressure after the release of the Westpac Consumer Confidence data for January, which showed a contraction. This might lead market participants to believe that the Reserve Bank of Australia (RBA) won't increase interest rates in its February meeting.
US Dollar Strengthens on Higher Treasury Yields, Hawkish Fed Comments, and Geopolitical Tensions
It's worth noting that Australia's Consumer Confidence, measured by the Melbourne Institute, dropped by 1.3%, reversing a previous gain of 2.7%. However, the Australian Dollar's decline was capped by the TD Securities Inflation data, showing a 5.2% year-on-year increase in December, up from 4.4% in November.
On a positive note, job advertisements in Australia improved by 0.1% in December, bouncing back from a 4.6% decline. In China, the People's Bank kept its medium-term facility rate steady at 2.5%, raising expectations for a future reduction in the Reserve Requirement Ratio. However, China's Consumer Price Index fell by 0.3% in December, contrary to the expected 0.4% decline, while the yearly Producer Price Index dropped by 2.7%, slightly more than the anticipated 2.6% fall.
Therefore, the drop in Australian consumer confidence and mixed economic data may exert downward pressure on the AUD/USD pair, reflecting uncertainty and potential economic challenges.
USD Strength and Geopolitical Tensions Impact AUD/USD Pair
Furthermore, the US Dollar Index (DXY) started the day on a positive note, boosted by higher US Treasury yields. Investor confidence in the USD strengthened after hawkish comments from Atlanta Fed President Raphael Bostic, who cautioned against premature rate cuts, foreseeing potential inflation fluctuations.
In the meantime, the geopolitical tensions, particularly the Israel-Gaza conflict affecting Red Sea trade, fueled risk aversion, contributing to USD gains. Barclays moved up its forecast for the first Fed rate cut to March, citing expectations of a 25 basis points reduction. Meanwhile, December's Producer Price Index (PPI) rose 1.0% YoY, and Consumer Price Index (CPI) surged to 3.4% YoY in December, exceeding market expectations and influencing the USD's performance.
Thus, the AUD/USD faced declines as the USD strengthened on higher Treasury yields, hawkish comments, geopolitical tensions, and Barclays' rate cut forecast.
AUD/USD - Technical Anaylsis
On January 16th, the Australian Dollar (AUD/USD) exhibited a notable decline, dropping by 0.71% to a current level of 0.66128. The 4-hour chart analysis reveals a pivot point at 0.6557. The AUD faces immediate resistance at 0.6602, followed by 0.6644 and 0.6688. On the downside, support levels are identified at 0.6509, 0.6466, and a seemingly out-of-place 0.6734, which may need correction.
The Relative Strength Index (RSI) is notably low at 28, indicating that the AUD/USD is potentially oversold. The Moving Average Convergence Divergence (MACD) shows a value of -0.001, with the signal line at -0.00182, suggesting a lack of strong directional momentum. The 50-day and 200-day Exponential Moving Averages (EMAs) are at 0.6654, further indicating potential resistance points.
A key pattern on the chart is a downward channel, reinforcing a bearish sentiment for the AUD, particularly below the 0.66333 mark. This trend suggests that the AUD is currently in a selling mode.
In conclusion, the short-term outlook for the AUD/USD pair appears bearish. Traders might consider a sell limit at 0.66333, with a take profit target near 0.6509 and a stop loss around 0.6688. However, given the oversold conditions, caution is advised as reversals are possible, especially if the pair tests and breaks above key resistance levels.
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