Daily Price Outlook

The AUD/USD is trading at 0.6713, having declined by 0.21% in the last 24 hours. The pair suffered significant losses due to China's failure to meet its GDP target and the Reserve Bank of Australia's rate announcement.

China disappointing GDP target

Over the weekend, the Chinese government announced a 5% GDP target for 2023, which is lower than the previous year's target of 5.5%. This figure was below market expectations and indicated Beijing's relatively cautious approach toward an economic recovery this year.

Despite business activity expanding at its highest rate in almost a decade in February after the removal of anti-COVID restrictions, the lower GDP target dampened hopes for a Chinese economic revival.

In addition, currencies that are sensitive to the Chinese economy, such as the Australian dollar, fell after the disappointing GDP target announcement.

RBA Rate Statement

On Tuesday, the Reserve Bank of Australia (RBA) raised interest rates, as expected, to control inflation, reaching a 10-year high. The RBA raised the cash rate target by 25 basis points to 3.60%, and it also increased the interest rate on Exchange Settlement balances by 25 basis points to 3.50%.

RBA Governor Philip Lowe stated that Australia's inflation had likely peaked and was expected to moderate in the coming months. He added that the RBA would continue to follow a data-driven approach for future rate hikes. However, he warned that the Australian economy's path to a soft landing is narrow.

Although the RBA's decision to raise the benchmark interest rate was in line with market expectations, the lack of any hawkish surprise appears to have weighed on the AUD. As a result, the Australian dollar experienced a significant decline.

Powell testimony approaches

Today during the US session, Powell is scheduled to speak before Congress and provide insight into the timeline for the direction of interest rates. However, market participants are uncertain what tone the Fed Chair will take, given that while inflation unexpectedly jumped in January, other economic data showed that the US economy was slowing down.

If Powell takes a more hawkish stance, it will improve expectations for US interest rate action and support the Dollar. Currently, DXY is trading lower at around 104.23.

The nonfarm payrolls report for February, which will be released on Friday, is also a key focus this week. Further indications of job market strength would give the Fed more flexibility to raise rates.

AUD/USD Intraday Technical Levels

Support      Resistance

0.6708         0.6762

0.6686         0.6792

0.6655         0.6815

Pivot Point: 0.6739

AUD/USD – Technical Outlook

The AUD/USD pair has been trading sideways recently, with its stability remaining below 0.6780. It is still moving within a bearish channel on the chart, supporting our view and targeting the next level of 0.6665.

The EMA50 is also supporting this bearish trend. However, if the pair manages to break above 0.6780, it could stop the current bearish correction and lead to an attempt to regain the primary bullish trend.

The expected trading range for today is between 0.6670 support and 0.6780 resistance.

Daily Price Outlook

The AUD/USD pair is trading at $0.6743, representing an increase of 0.21% in the past 24 hours. Traders are closely analyzing the comments made by Federal Reserve officials while also waiting for China's upcoming legislative meeting to gauge the level of economic support that could be expected. Despite these factors, the Australian dollar has remained steady.

Chinese Economy and Its Impact on AUD/USD

The Chinese economy is making significant progress toward economic recovery after lifting Covid restrictions. The government and the People's Bank of China (PBoC) are committed to boosting domestic demand by implementing further stimulus and reform initiatives.

In addition, according to a report by S&P Global released on Friday, China's services sector experienced growth in February due to increasing demand. The report indicates that the Caixin Services PMI rose from 52.9 in January to 55.0 in February, showing a consecutive month-over-month improvement in activity.

It is worth noting that Australia is China's top trading partner, and an increase in China's service PMI benefits the Australian Dollar.

All eyes are now on China's annual parliamentary session, which is set to take place on Sunday. Beijing will announce new policy measures to support economic growth and targets.

RBA's Interest Rate Guidance

Despite a recent decline in Australia's Consumer Price Index (CPI), the Reserve Bank of Australia (RBA) remains steadfast in its hawkish outlook. RBA policymakers have not indicated that Australian inflation has peaked so the central bank will maintain a hawkish position.

A recent Reuters survey on the RBA's interest rate guidance reveals that the central bank is expected to increase its interest rate by 25 basis points (bps) to 3.60% on Tuesday, March 7.

The survey predicts that the RBA will increase its interest rate again in Q2 before pausing until next year, resulting in a higher peak rate than anticipated. Further rate hikes may support the Australian Dollar (AUD).

Dollar Under Pressure

On Thursday, Raphael Bostic, the president of the Atlanta Federal Bank, suggested that the current tightening cycle by the Federal Reserve could end by mid-summer. While he supports a 25 basis point rate hike in March, he is open to reconsidering a more hawkish outlook if inflation and labor market figures show improvement.

Bostic's comments have pressured the US Dollar Index (DXY), currently trading at 104.89. Later today, the US Institute of Supply Management (ISM) will release data on the Services PMI (Feb), potentially supporting the US Dollar.

AUD/USD Intraday Technical Levels

Support      Resistance

0.6700         0.6762

0.6672         0.6796

0.6639         0.6824

Pivot Point: 0.6734

AUD/USD – Technical Outlook

Yesterday, the AUDUSD pair traded negatively and approached the 0.6700 level. There is some bullish bias in the market due to stochastic positivity. The following support level is at 0.6665, and the pair must remain below 0.6780 to continue the projected downtrend.

The EMA50 is still supporting the bearish wave within the negative channel. Today, the trading range is expected to be between the support level of 0.6670 and the resistance level of 0.6780.