Daily Price Outlook
During the European trading session, the AUD/USD currency pair continued its losing streak, staying under pressure around the 0.6215 level.
The Aussie dollar has been struggling for the past four days, mainly due to a strong US dollar and cautious market sentiment.
However, the Australian dollar found some support after the release of the Export Price Index. The Australian Bureau of Statistics showed that export prices rose by 3.6% in Q4 2024, bouncing back from a 4.3% drop in Q3. This marked the first increase in export prices since Q4 2023, giving the Aussie dollar a slight boost.
Meanwhile, the US Dollar Index (DXY) remained stable around 108.00, reflecting the dollar’s strength. The Federal Reserve, as expected, kept interest rates unchanged at 4.25%-4.50% in its January meeting.
This came after three rate cuts since September 2024, totaling 1%. With the Fed signaling a cautious approach, the US dollar held firm, keeping pressure on the AUD/USD pair.
Australian Dollar Faces Pressure Amid Rate Cut Expectations and Mixed Economic Data
On the AUD front, the Australian Dollar (AUD) extended its losing streak against the US Dollar (USD) for the fourth straight day on Thursday, but the AUD/USD pair saw some recovery after the release of key data.
The Australian Bureau of Statistics reported that export prices rose by 3.6% in Q4 2024, bouncing back from a 4.3% decline in the previous quarter.
This marked the first increase since Q4 2023, giving the Aussie dollar a brief boost. Additionally, Australia’s Import Price Index rose by 0.2% in Q4 2024, recovering from a 1.4% drop in Q3, with surging gold prices playing a big role due to investors seeking safe-haven assets.
Meanwhile, speculation about future interest rate cuts in Australia added to market pressure on the AUD. Major banks like ANZ, CBA, Westpac, and National Australia Bank (NAB) now expect a 25 basis point rate cut from the Reserve Bank of Australia (RBA) in February, earlier than previously expected.
This is driven by easing inflationary pressures toward the end of 2024. The RBA has kept the official cash rate at 4.35% since November 2023, but it is holding out for inflation to sustainably return to its target range of 2%-3% before making any cuts, which could influence the AUD/USD pair further.
USD Strengthens Amid Fed’s Cautious Stance and Awaited US GDP Data, Putting Pressure on AUD/USD
On the US front, the US Dollar (USD) strengthened, putting pressure on the AUD/USD pair. The US Federal Reserve (Fed) kept interest rates unchanged at 4.25%-4.50% in its January meeting, as expected.
However, the Fed did not signal any immediate rate cuts, which helped maintain the strength of the US dollar.
Fed Chair Jerome Powell emphasized that the central bank would need to see significant progress on inflation or weakness in the labor market before making any changes to its policy. This cautious stance from the Fed further supported the US dollar.
Traders are now awaiting the release of the US fourth-quarter GDP data, which is expected to show a slowdown in growth, with a forecast of 2.6% compared to the previous 3.1%. Inflation concerns also linger, as the Q4 GDP Price Index is expected to rise to 2.5%, up from 1.9%.
Meanwhile, political developments, including the possibility of new tariffs proposed by Treasury Secretary Scott Bessent, could also influence the USD’s future strength, adding uncertainty to the market.
AUD/USD – Technical Analysis
The AUD/USD pair continues to face downward pressure, trading at $0.62202, below the $0.62428 pivot level. A stronger U.S. dollar and risk-off sentiment have kept the Australian dollar under pressure, limiting any significant recovery attempts.
Technically, the 50-day EMA at $0.62668 is reinforcing resistance, aligning with the immediate resistance at $0.62632. A break above this level could lead to a retest of $0.62927, while further bullish momentum may push prices toward $0.63235.
However, given the prevailing bearish sentiment, upside potential remains limited unless there’s a fundamental shift in market conditions.
On the downside, immediate support stands at $0.62110, with a break below this level exposing AUD/USD to further losses toward $0.61865 and $0.61648. A sustained move below $0.62110 could accelerate selling pressure, with the pair possibly extending losses if risk aversion strengthens.
From a trading perspective, a sell position below $0.62425 aligns with a take profit target at $0.61980 and a stop loss at $0.62687, reflecting the ongoing bearish momentum. The market is currently struggling to gain traction, and without a break above the pivot level, the bearish bias remains intact.
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