AUD/USD Price Analysis – Aug 08, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6554 level, hitting an intra-day high of 0.6565. This upward trend can be attributed to Reserve Bank of Australia (RBA) Governor Michelle Bullock's hawkish guidance on interest rates, which supported the Australian dollar and contributed to the AUD/USD pair's gains.
Meanwhile, the US dollar losing traction was another key factor keeping the AUD/USD pair higher. However, market sentiment remains risk-averse due to fears of a potential global slowdown, which could cap gains in the AUD/USD pair as it undermines riskier assets, including the Australian dollar.
RBA's Hawkish Outlook Strengthens Australian Dollar and AUD/USD Pair
On the AUD front, the Australian dollar strengthened following Reserve Bank of Australia (RBA) Governor Michelle Bullock's hawkish outlook on interest rates. During a talk at the Rotary Club of Armidale, she emphasized that the RBA is prepared to increase the Official Cash Rate (OCR) to manage inflation risks.
Bullock also noted that inflation is unlikely to return to the target range of 2-3% before the end of 2025. Her comments show the RBA's strong commitment to controlling inflation, which boosted confidence in the Australian dollar and led to its increase in value.
She noted that the inflation rate is unlikely to return to the 2-3% target range before the end of 2025. This assertive stance on inflation and potential rate hikes bolstered the Australian dollar, reflecting increased confidence in the RBA's commitment to managing economic pressures.
Therefore, the hawkish stance by RBA Governor Bullock likely supports the Australian dollar, potentially strengthening the AUD/USD pair as markets anticipate further rate hikes and increased inflation vigilance.
US Dollar Pressure and Fed Rate Cut Speculation Boost AUD/USD
On the US front, the broad-based US dollar remained under pressure, struggling to gain traction amid softer economic data signaling a faster-than-expected slowdown in the world's largest economy. This has fueled speculation about larger interest rate cuts by the Federal Reserve, thereby supporting the non-yielding yellow metal, gold.
On the economic data front, government figures released on Tuesday showed that the US trade deficit narrowed by 2.5%, decreasing to $73.1 billion in June from $75.0 billion in May. This reduction was primarily driven by a 1.5% rise in exports, particularly in aircraft and US-produced oil and gas.
As a result, markets are now fully pricing in a 100% likelihood that the Federal Reserve will begin lowering borrowing costs at its upcoming policy meeting in September, with nearly a 70% probability of a 50-basis-point rate cut.
Therefore, the pressure on the US dollar and speculation about Fed rate cuts could strengthen the AUD/USD pair, as lower US interest rates may make the Australian dollar more attractive relative to the greenback.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.65553, reflecting a 0.57% increase on the day. On the 4-hour chart, the pivotal point to watch is $0.6511.
Immediate resistance levels are marked at $0.6576, $0.6610, and $0.6643, while support levels are positioned at $0.6475, $0.6436, and $0.6402. These levels are crucial in determining the pair's next move.
The Relative Strength Index (RSI) stands at 56, suggesting a moderately bullish sentiment. The 50-day Exponential Moving Average (EMA) is currently at $0.6523, indicating a slight upward trend.
If the price remains above the pivot point, it could signify continued bullish momentum. However, a fall below this level might shift the sentiment to bearish.
Given the current market conditions, a strategic entry at a buy limit order of $0.65235 is recommended, with a take profit target at $0.66096 and a stop loss at $0.64865.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD is trading at $0.65553, up 0.57%.
- RSI indicates moderately bullish sentiment at 56.
- Entry: Buy Limit at $0.65235, Take Profit at $0.66096, Stop Loss at $0.64865.
The AUD/USD pair is currently trading at $0.65553, reflecting a 0.57% increase on the day. On the 4-hour chart, the pivotal point to watch is $0.6511.
Immediate resistance levels are marked at $0.6576, $0.6610, and $0.6643, while support levels are positioned at $0.6475, $0.6436, and $0.6402. These levels are crucial in determining the pair's next move.
The Relative Strength Index (RSI) stands at 56, suggesting a moderately bullish sentiment. The 50-day Exponential Moving Average (EMA) is currently at $0.6523, indicating a slight upward trend.
If the price remains above the pivot point, it could signify continued bullish momentum. However, a fall below this level might shift the sentiment to bearish.
Given the current market conditions, a strategic entry at a buy limit order of $0.65235 is recommended, with a take profit target at $0.66096 and a stop loss at $0.64865.
AUD/USD - Trade Ideas
Entry Price – Buy Limit 0.65235
Take Profit – 0.66096
Stop Loss – 0.64865
Risk to Reward – 1: 2
Profit & Loss Per Standard Lot = +$861/ -$370
Profit & Loss Per Mini Lot = +$86/ -$37
AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trades at $0.64982, up 0.22%, with bullish sentiment below the $0.6538 pivot point.
- RSI at 47 indicates a neutral market; the 50-day EMA suggests resistance at $0.6526.
- Sell below $0.65234 with a take-profit at $0.64399; stop-loss set at $0.65687 for risk management.
The Australian Dollar (AUD) is showing modest strength against the US Dollar, with the AUD/USD pair trading at $0.64982, up 0.22% on the day. The currency pair is experiencing a short-term bullish trend, although it remains below the key pivot point of $0.6538.
Immediate resistance is found at $0.6569, with further hurdles at $0.6610 and $0.6643. The AUD/USD must break through these resistance levels to establish a stronger upward trajectory.
On the downside, immediate support is located at $0.6481, followed by additional support levels at $0.6439 and $0.6402.
These levels serve as critical markers for traders seeking to manage risk, as a decline below them could signify renewed bearish momentum.
The 50-day Exponential Moving Average (EMA) is currently at $0.6526, slightly above the current price, which could act as a barrier to further gains if the pair struggles to maintain its upward momentum.
The Relative Strength Index (RSI) is at 47, suggesting that the pair is neither overbought nor oversold.
This neutral reading indicates a balanced market, providing an opportunity for traders to capitalize on potential breakout or breakdown scenarios.
Given the current technical setup, the recommended strategy is to consider selling below $0.65234, with a take-profit target of $0.64399 and a stop-loss at $0.65687 to manage potential reversals.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.65234
Take Profit – 0.64399
Stop Loss – 0.65687
Risk to Reward – 1: 1.8
Profit & Loss Per Standard Lot = +$83/ -$453
Profit & Loss Per Mini Lot = +$83/ -$45
AUD/USD Price Analysis – Aug 06, 2024
Daily Price Outlook
Despite the RBA's hawkish stance, the AUD/USD currency pair continued its downward trend, trading around the 0.6481 level and hitting an intra-day low of 0.6473.
This decline can be attributed to the US dollar's mild strength, bolstered by the surge in Treasury bond yields, which has continued to exert pressure on the AUD/USD pair.
Furthermore, the escalating geopolitical tensions in the Middle East have undermined the riskier Australian dollar, contributing to further losses.
Moving ahead, traders are watching Tuesday’s US Trade Balance data, the only release for the day, which could impact the USD if bond yields fluctuate.
Risk sentiment will also play a role, while the upcoming Chinese Trade Balance data on Wednesday may influence the AUD/USD pair.
RBA’s Steady Rates and Positive Equity Markets Support AUD/USD, but Economic Concerns Limit Gains
On the AUD front, the Australian Dollar (AUD) gained some traction earlier on Tuesday after the Reserve Bank of Australia (RBA) decided to keep interest rates unchanged and maintain a tight policy to address ongoing inflation.
RBA Governor Michele Bullock supported this decision, noting that controlling inflation might take longer and could require higher rates for a while. This positive outlook, combined with a rise in global equity markets, helped boost the AUD/USD pair.
However, concerns about a potential economic downturn especially given the AUD’s sensitivity to Chinese economic conditions are limiting further gains.
Therefore, the RBA's decision to keep rates steady and maintain a restrictive policy, combined with a positive shift in global equity markets, supported the AUD/USD pair. However, concerns about a potential economic downturn are capping further gains.
Economic Uncertainty and Fed Speculation Keep AUD/USD Under Pressure
On the US front, the recent economic data showing declines in US manufacturing and slower job growth has raised recession fears and speculation about potential Federal Reserve rate cuts. This has led to a drop in US Treasury yields, which impacted the AUD/USD pair.
Despite this, San Francisco Fed President Mary Daly's reassurance that the job market slowdown isn’t a major concern has kept the US dollar relatively supported. The combination of a modestly stronger US dollar and broader economic uncertainties has kept the AUD/USD pair under pressure.
AUD/USD - Technical Analysis
The Australian Dollar (AUD) is showing modest strength against the US Dollar, with the AUD/USD pair trading at $0.64982, up 0.22% on the day.
The currency pair is experiencing a short-term bullish trend, although it remains below the key pivot point of $0.6538.
Immediate resistance is found at $0.6569, with further hurdles at $0.6610 and $0.6643. The AUD/USD must break through these resistance levels to establish a stronger upward trajectory.
On the downside, immediate support is located at $0.6481, followed by additional support levels at $0.6439 and $0.6402. These levels serve as critical markers for traders seeking to manage risk, as a decline below them could signify renewed bearish momentum.
The 50-day Exponential Moving Average (EMA) is currently at $0.6526, slightly above the current price, which could act as a barrier to further gains if the pair struggles to maintain its upward momentum.
The Relative Strength Index (RSI) is at 47, suggesting that the pair is neither overbought nor oversold.
This neutral reading indicates a balanced market, providing an opportunity for traders to capitalize on potential breakout or breakdown scenarios.
Given the current technical setup, the recommended strategy is to consider selling below $0.65234, with a take-profit target of $0.64399 and a stop-loss at $0.65687 to manage potential reversals.
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AUD/USD Price Analysis – Aug 01, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair failed to stop its downward rally and remained under pressure around the 0.6528 level, hitting an intra-day low of 0.6514.
This decline in the AUD/USD pair can be attributed to the renewed strength of the US dollar, which gained traction due to robust economic data and expectations for Federal Reserve policy adjustments.
Despite the Federal Reserve's dovish guidance on interest rates, the US dollar has appreciated, making the Australian dollar less attractive.
Furthermore, the latest inflation report released on Wednesday has reduced expectations that the Reserve Bank of Australia (RBA) will implement another rate hike at its policy meeting next week.
This was seen as another key factor that undermined the AUD currency and contributed to the AUD/USD pair losses.
US Dollar Strength and Anticipated Economic Data Likely to Weaken AUD/USD
On the US front, the broad-based US dollar has seen significant bullish momentum, with the US Dollar Index (DXY) rebounding strongly to 104.20 from an intraday low of 103.86.
This rise in the US dollar is primarily due to market expectations of a robust US economy, despite the Federal Reserve's dovish guidance on interest rates. This has made the Australian dollar less attractive to investors.
On the data front, investors are keenly awaiting the US ISM Manufacturing PMI report for July, set for release at 14:00 GMT.
The PMI is expected to rise slightly to 48.8 from June’s 48.5, indicating continued contraction in manufacturing. Furthermore, the Manufacturing Prices Paid index is predicted to grow more slowly at 51.8, suggesting a moderation in inflation.
The key event for the FX market will be the US Nonfarm Payrolls (NFP) report on Friday, with expectations of a hiring increase of 175K in July, down from 206K. The Unemployment Rate is forecasted to hold steady at 4.1%, while wage growth is expected to slow to 3.7% annually.
Therefore, the US dollar’s strength and anticipated economic data, including the ISM Manufacturing PMI and Nonfarm Payrolls report, are likely to put downward pressure on the AUD/USD pair. The stronger US dollar makes the Australian dollar less attractive to investors.
Mixed Economic Data and Lower RBA Rate Hike Expectations Pressure AUD/USD
On the AUD front, better-than-expected Trade Balance data combined with a softer inflation report has lowered expectations for a Reserve Bank of Australia (RBA) rate hike at the upcoming policy meeting. Economists caution that further rate increases could jeopardize Australia's economic recovery.
Consequently, markets are now pricing in a 50% chance of an RBA rate cut in November, much earlier than the previously anticipated April next year. National Australia Bank (NAB) expects the RBA's cash rate to remain at 4.35% until May 2025, then decline to 3.6% by December 2025, with further decreases in 2026.
On the data front, Australia reported a trade surplus of 5,589 million for June, beating the expected 5,000 million but down from 5,773 million previously. The Judo Bank Manufacturing PMI rose slightly to 47.5 in July, indicating continued but slower deterioration in manufacturing conditions.
Meanwhile, the Monthly CPI increased by 3.8% year-over-year to June, easing from 4% in May, while the RBA Trimmed Mean CPI rose by 3.9% YoY, just under the forecast of 4.0%. Building Permits fell by 6.5% in June, worse than the 3.0% decline expected, but improved from a 3.7% YoY drop in May.
Therefore, the mixed economic data, including a trade surplus and weaker inflation, combined with reduced expectations for an RBA rate hike, has put pressure on the AUD. This could lead to a potential weakening of the AUD/USD pair in the near term.
AUD/USD - Technical Analysis
The AUD/USD pair is trading at $0.65284, reflecting a decline of 0.18% as the currency struggles to maintain upward momentum amidst a strengthening U.S. dollar. On the 4-hour chart, the pair is navigating just below the pivot point at $0.6542, a crucial threshold that could determine near-term direction.
The current price action suggests potential for further declines, especially if the pair fails to reclaim ground above this pivot level.
Immediate resistance is seen at $0.6569, with subsequent hurdles at $0.6610 and $0.6643. These levels are key for bulls looking to reassert control and drive prices higher.
However, with the Relative Strength Index (RSI) at 47, the pair is hovering near the midpoint, indicating a lack of definitive momentum and the possibility of further consolidation.
On the downside, immediate support is located at $0.6493, with additional supports at $0.6459 and $0.6423. These levels are critical for maintaining the current trading range and could attract buyers if the AUD/USD tests these lows.
The 50-day Exponential Moving Average (EMA) at $0.6541 is slightly above the current price, suggesting that bearish pressures may persist unless a decisive move above this average occurs.
Traders might consider entering a short position below $0.65391, targeting a take profit at $0.64931, with a stop loss at $0.65718 to mitigate risk.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD at $0.65284, eyes pivot point $0.6542 amid bearish momentum.
- RSI at 47 indicates consolidation; potential range-bound trading near key supports.
- Consider shorting below $0.65391; target $0.64931, stop loss at $0.65718.
The AUD/USD pair is trading at $0.65284, reflecting a decline of 0.18% as the currency struggles to maintain upward momentum amidst a strengthening U.S. dollar.
On the 4-hour chart, the pair is navigating just below the pivot point at $0.6542, a crucial threshold that could determine near-term direction. The current price action suggests potential for further declines, especially if the pair fails to reclaim ground above this pivot level.
Immediate resistance is seen at $0.6569, with subsequent hurdles at $0.6610 and $0.6643. These levels are key for bulls looking to reassert control and drive prices higher.
However, with the Relative Strength Index (RSI) at 47, the pair is hovering near the midpoint, indicating a lack of definitive momentum and the possibility of further consolidation.
On the downside, immediate support is located at $0.6493, with additional supports at $0.6459 and $0.6423. These levels are critical for maintaining the current trading range and could attract buyers if the AUD/USD tests these lows.
The 50-day Exponential Moving Average (EMA) at $0.6541 is slightly above the current price, suggesting that bearish pressures may persist unless a decisive move above this average occurs.
Traders might consider entering a short position below $0.65391, targeting a take profit at $0.64931, with a stop loss at $0.65718 to mitigate risk.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.65391
Take Profit – 0.64931
Stop Loss – 0.65718
Risk to Reward – 1: 1.4
Profit & Loss Per Standard Lot = +$460/ -$327
Profit & Loss Per Mini Lot = +$46/ -$32
AUD/USD Price Analysis – July 30, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward momentum and remained well-bid around the 0.6542 level, hitting an intraday high of 0.6562.
This upward movement can be attributed to several factors, including the hawkish sentiment surrounding the RBA's policy decision and a bearish US Dollar, which lose ground due to increased odds of a Fed rate cut in September.
Impact of Australian Economic Data and RBA Forecasts on AUD/USD Pair
On the AUD front, the Australian Dollar edged higher against the US Dollar following Tuesday's Building Permits data release.
Australia's Consumer Price Index (CPI) data, set for release on Wednesday, could offer clues about the Reserve Bank of Australia’s (RBA) future monetary policy. Analysts expect a slight rise in headline inflation for Q2, with the core rate remaining steady.
This inflation report will influence the RBA’s rate hike decision next week, although economists warn that higher rates might risk Australia’s economic recovery. Meanwhile, the Australian Prudential Regulation Authority (APRA) noted rising arrears rates but will keep current macroprudential policies unchanged.
On the data front, Australia's Building Permits fell by 6.5% in June, more than the expected 3.0% drop, following a 5.7% rise in May. Year-over-year, Building Permits declined by 3.7%, better than last year's 8.5% decrease.
National Australia Bank (NAB) forecasts the Reserve Bank of Australia's (RBA) cash rate will stay at 4.35% until May 2025. The NAB Economics team predicts the rate will drop to 3.6% by December 2025, with further declines expected in 2026.
Therefore, the AUD/USD currency pair could be influenced by Australia's mixed Building Permits data and inflation expectations, along with NAB's forecast of stable RBA rates until 2025. Market sentiment may fluctuate based on the upcoming CPI data and the RBA's rate decisions.
Impact of US Rate Cuts and Inflation Data on AUD/USD Pair
On the US front, the US Dollar could face challenges due to rising expectations of a Federal Reserve (Fed) interest rate cut in September. Meanwhile, the cooling inflation and easing labor market conditions have fueled expectations of three rate cuts this year. The Fed's Interest Rate Decision on Wednesday will be crucial.
Bank of America (BofA) suggests that strong US economic growth allows the Federal Open Market Committee (FOMC) to "afford to wait" before making changes, with the economy remaining robust. BofA expects the Fed to start cutting rates in December.
On the data front, the US Personal Consumption Expenditures (PCE) Price Index rose by 2.5% year-over-year in June, slightly down from 2.6% in May and meeting market expectations.
Monthly, the PCE Index increased by 0.1% after no change in May. Core PCE inflation, excluding food and energy, also climbed to 2.6% in June, matching May's increase and surpassing the 2.5% forecast. Month-over-month, the core PCE Index rose by 0.2% in June, up from 0.1% in May.
Therefore, the US rate cuts and cooling inflation could weaken the US Dollar, potentially benefiting the Australian Dollar. This shift might support the AUD/USD pair as market expectations influence currency movements.
AUD/USD - Technical Analysis
AUD/USD is trading at $0.65535, reflecting a slight uptick of 0.05% during the early trading hours. The pivot point stands at $0.6595, serving as a critical indicator for market direction.
Immediate resistance is identified at $0.6579, with subsequent resistance levels at $0.6620 and $0.6653. On the downside, immediate support is observed at $0.6514, followed by stronger supports at $0.6489 and $0.6459.
The Relative Strength Index (RSI) is currently at 42, indicating a slightly bearish sentiment but not yet in oversold territory. This suggests that while the market leans towards selling, there remains potential for upward corrections.
The 50-day Exponential Moving Average (EMA) is positioned at $0.6612, above the current price. The proximity to this EMA highlights a significant resistance level; a move above this could signal a shift towards bullish momentum, whereas failure to breach it might reinforce the prevailing bearish trends.
Given the current technical setup, a strategic entry point for traders is recommended above $0.65356, targeting a take profit level of $0.65949. Setting a stop loss at $0.65045 is advised to manage potential downside risks effectively.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD at $0.65535, pivot point at $0.6595.
- Immediate resistance at $0.6579; support at $0.6514.
- RSI at 42, 50-day EMA at $0.6612 indicating slight bearish sentiment.
AUD/USD is trading at $0.65535, reflecting a slight uptick of 0.05% during the early trading hours. The pivot point stands at $0.6595, serving as a critical indicator for market direction.
Immediate resistance is identified at $0.6579, with subsequent resistance levels at $0.6620 and $0.6653. On the downside, immediate support is observed at $0.6514, followed by stronger supports at $0.6489 and $0.6459.
The Relative Strength Index (RSI) is currently at 42, indicating a slightly bearish sentiment but not yet in oversold territory. This suggests that while the market leans towards selling, there remains potential for upward corrections.
The 50-day Exponential Moving Average (EMA) is positioned at $0.6612, above the current price.
The proximity to this EMA highlights a significant resistance level; a move above this could signal a shift towards bullish momentum, whereas failure to breach it might reinforce the prevailing bearish trends.
Given the current technical setup, a strategic entry point for traders is recommended above $0.65356, targeting a take profit level of $0.65949. Setting a stop loss at $0.65045 is advised to manage potential downside risks effectively.
AUD/USD - Trade Ideas
Entry Price – Buy Above 0.65356
Take Profit – 0.65949
Stop Loss – 0.65045
Risk to Reward – 1: 1.9
Profit & Loss Per Standard Lot = +$593/ -$311
Profit & Loss Per Mini Lot = +$59/ -$31
AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD price at $0.65453, down 0.48%, with key support at $0.6517.
- RSI at 19 indicates AUD/USD is oversold, suggesting potential for reversal or consolidation.
- 50 EMA at $0.6683, with current price below, signaling continued bearish trend.
The Australian dollar (AUD/USD) declined by 0.48%, settling at $0.65453 in recent trading sessions. This downward movement places the currency pair in a delicate position as it hovers near significant technical levels. Traders and analysts are keenly observing these levels to gauge potential future movements.
The pivot point at $0.6517 is a critical marker for traders. Immediate resistance is seen at $0.6592. A break above this could push the AUD/USD towards the next resistance levels at $0.6636 and $0.6682.
On the downside, the immediate support lies at $0.6517. Further declines could find additional support at $0.6491 and $0.6465, which are vital for preventing a deeper sell-off.
Technical indicators offer a mixed outlook. The Relative Strength Index (RSI) is notably low at 19, suggesting that the AUD/USD is in oversold territory. This could imply a potential reversal or a consolidation phase in the near term as the market corrects the oversold conditions.
The 50-day Exponential Moving Average (EMA) stands at $0.6683, indicating a bearish trend as the current price remains well below this level. A sustained move below the 50 EMA often signals continued downward momentum, adding pressure on the AUD/USD.
In conclusion, the recommendation is to consider short positions below $0.65580, targeting $0.65166 for profit-taking with a stop loss set at $0.65828.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.65580
Take Profit – 0.65166
Stop Loss – 0.65828
Risk to Reward – 1: 1.6
Profit & Loss Per Standard Lot = +$414/ -$248
Profit & Loss Per Mini Lot = +$41/ -$24
AUD/USD Price Analysis – July 25, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair failed to stop its downward trend and remained well offered around the 0.6527 level, hitting an intra-day low of 0.6519.
The downward rally can be attributed to the weak economic outlooks for China and Australia, which have dampened the Australian dollar and contributed to the AUD/USD pair's losses.
In contrast, the bearish US dollar, driven by increasing expectations that the Federal Reserve (Fed) will cut interest rates multiple times before the year's end, has helped the AUD/USD pair to limit its losses.
Australian Dollar Under Pressure from China’s Economic Slowdown and Weak Market Sentiment
On the AUD front, The Australian Dollar (AUD) is under pressure due to concerns about China's economic slowdown. China's recent decision to cut its Loan Prime Rate (LPR) by 10 basis points, coupled with a lack of strong growth measures, has raised fears about the country's economic health.
This is significant for Australia, as the AUD often mirrors China's economic conditions and Australia heavily depends on iron ore exports to China.
With global iron ore prices falling to a three-week low and anticipated declines in foreign investment in Australia, the AUD faces further challenges. Additionally, weak market sentiment before the US Q2 GDP report and nominal losses in S&P 500 futures compound the AUD's difficulties.
Impact of US Economic Data and Outlook on AUD/USD
On the US front, the US Dollar is falling but remains above the key support level of 104.00. However, the US economy is growing at a solid 2.0% annual rate, up from the previous 1.4%, although the GDP Price Index has slowed to 3.6% from 3.1%. This could lead to early rate cuts by the Federal Reserve.
It should be noted that the recent S&P Global PMI data for July is somewhat positive, suggesting that the economy is doing well with controlled inflation, though rising costs for materials and labor might impact prices and profit margins.
Despite the expectation of Fed rate cuts, gold prices are declining due to a stronger economic outlook and higher production costs.
The S&P Global Composite PMI improved to 55, showing overall growth, while the Manufacturing PMI fell to 49.5, indicating slower manufacturing, and the Services PMI rose to 56.0, reflecting stronger growth in services.
Therefore, the Australian Dollar (AUD) may weaken against the US Dollar (USD) as improved US economic data and a stronger outlook overshadow expectations of Fed rate cuts, impacting AUD/USD negatively.
AUD/USD - Technical Analysis
The Australian dollar (AUD/USD) declined by 0.48%, settling at $0.65453 in recent trading sessions. This downward movement places the currency pair in a delicate position as it hovers near significant technical levels. Traders and analysts are keenly observing these levels to gauge potential future movements.
The pivot point at $0.6517 is a critical marker for traders. Immediate resistance is seen at $0.6592. A break above this could push the AUD/USD towards the next resistance levels at $0.6636 and $0.6682.
On the downside, the immediate support lies at $0.6517. Further declines could find additional support at $0.6491 and $0.6465, which are vital for preventing a deeper sell-off.
Technical indicators offer a mixed outlook. The Relative Strength Index (RSI) is notably low at 19, suggesting that the AUD/USD is in oversold territory. This could imply a potential reversal or a consolidation phase in the near term as the market corrects the oversold conditions.
The 50-day Exponential Moving Average (EMA) stands at $0.6683, indicating a bearish trend as the current price remains well below this level. A sustained move below the 50 EMA often signals continued downward momentum, adding pressure on the AUD/USD.
In conclusion, the recommendation is to consider short positions below $0.65580, targeting $0.65166 for profit-taking with a stop loss set at $0.65828.
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