AUD/USD Price Analysis – May 21, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well-bid around the 0.6669 level, hitting the intraday high of 0.6676. The reason for its upward trend could be attributed to the hawkish RBA minutes and a slight decline in the US Dollar.
The Reserve Bank of Australia recently discussed the possibility of raising interest rates further due to concerns that inflation might remain high for an extended period. This underpinned the AUD currency and contributed to the gains in the AUD/USD pair.
Furthermore, the risk-on market sentiment, backed by the belief that the Federal Reserve will cut interest rates in the US, was seen as another key factor that underpinned the riskier Australian dollar and extended gains for the AUD/USD pair.
Mixed Signals Impacting AUD/USD Amid Fed Rate Cut Speculations and Inflation Concerns
Despite hints from Federal Reserve (Fed) officials suggesting a more hawkish stance on interest rates, the US Dollar is still facing challenges and remaining under pressure. Traders are betting on rate cuts in September, with a 61% chance according to the CME FedWatch tool.
This probability has decreased from 65% recorded just a week ago. The AUD/USD pair may see upward pressure if the US Dollar weakens due to expectations of rate cuts in September, despite hints of a hawkish stance from Fed officials.
On the flip side, Cleveland Fed Bank President Loretta Mester warned that inflation risks are increasing, suggesting that reducing interest rates three times this year might not be the right move. She emphasized the importance of keeping interest rates the same and highlighted the need to gather more information before deciding on any changes.
Reserve Bank of Australia's Hawkish Tone Boosts AUD/USD Pair
Another factor boosting the AUD/USD pair was the Reserve Bank of Australia (RBA) minutes from the May meeting, indicating policymakers' discussions about potential interest rate hikes due to concerns over prolonged high inflation risks. This development strengthens the Australian dollar as it contrasts with expectations of US rate cuts.
The market perceives the RBA's consideration of further rate increases as a positive signal for the Australian economy, enhancing demand for the Aussie asset. However, global economic uncertainties and fluctuations in risk sentiment could temper the currency's strength.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.66614, down 0.15% in the 4-hour timeframe. This modest decline reflects the prevailing cautious sentiment in the market, as traders weigh the impacts of global economic data and central bank policies. Key technical levels are crucial for understanding potential price movements.
The pivot point is set at $0.6650, acting as a critical benchmark for traders. Immediate resistance levels are identified at $0.6682, followed by $0.6711 and $0.6746. These resistance levels indicate potential barriers to upward movement, suggesting areas where selling pressure might intensify.
On the downside, immediate support is noted at $0.6618, with further support levels at $0.6586 and $0.6559. These support levels are essential for preventing further declines, offering potential rebound points if the market faces downward pressure.
The Relative Strength Index (RSI) is at 43, indicating a slightly bearish sentiment but still within the neutral range. This level suggests that the AUD/USD is neither overbought nor oversold, allowing for possible fluctuations based on upcoming market data.
The 50-day Exponential Moving Average (EMA) is positioned at $0.6676. Currently, the price is trading below this level, hinting at a bearish outlook in the short term. However, if the price moves above the 50-day EMA, it could signal a shift towards a more bullish trend.
Conclusion: The recommended trading strategy is to buy above $0.66505, with a take profit target at $0.66923 and a stop loss at $0.66284.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trading at $0.66614, down 0.15%, reflecting a cautious market sentiment.
- Immediate resistance levels are $0.6682, $0.6711, and $0.6746; potential barriers to upward movement.
- Support levels at $0.6618, $0.6586, and $0.6559 are crucial for preventing further declines.
The AUD/USD pair is currently trading at $0.66614, down 0.15% in the 4-hour timeframe. This modest decline reflects the prevailing cautious sentiment in the market, as traders weigh the impacts of global economic data and central bank policies. Key technical levels are crucial for understanding potential price movements.
The pivot point is set at $0.6650, acting as a critical benchmark for traders. Immediate resistance levels are identified at $0.6682, followed by $0.6711 and $0.6746. These resistance levels indicate potential barriers to upward movement, suggesting areas where selling pressure might intensify.
On the downside, immediate support is noted at $0.6618, with further support levels at $0.6586 and $0.6559. These support levels are essential for preventing further declines, offering potential rebound points if the market faces downward pressure.
The Relative Strength Index (RSI) is at 43, indicating a slightly bearish sentiment but still within the neutral range. This level suggests that the AUD/USD is neither overbought nor oversold, allowing for possible fluctuations based on upcoming market data.
The 50-day Exponential Moving Average (EMA) is positioned at $0.6676. Currently, the price is trading below this level, hinting at a bearish outlook in the short term. However, if the price moves above the 50-day EMA, it could signal a shift towards a more bullish trend.
Conclusion: The recommended trading strategy is to buy above $0.66505, with a take profit target at $0.66923 and a stop loss at $0.66284.
AUD/USD - Trade Ideas
Entry Price – Buy Above 0.66505
Take Profit – 0.66923
Stop Loss – 0.66284
Risk to Reward – 1: 1.8
Profit & Loss Per Standard Lot = +$418/ -$221
Profit & Loss Per Mini Lot = +$41/ -$22
AUD/USD Price Analysis – May 16, 2024
Daily Price Outlook
Despite the bearish US dollar, the AUDUSD currency pair was unable to extend its upward rally and edged lower around 0.6671, hitting the intraday low of 0.6669 level. However, the reason for its downward trend can be attributed to the dovish sentiment surrounding RBA’s policy stance, which undermined the AUD currency and contributed to the AUD/USD pair losses.
Moreover, the bearish US dollar, triggered by the release of the latest Consumer Price Index (CPI) report, was seen as one of the key factors that helped the AUD/USD pair to limit its deeper losses. In contrast to this, the losses in the AUD/USD pair could be short-lived as the risk-on market sentiment tends to underpin the riskier Australian dollar.
Impact of US Economic Data on AUD/USD Pair
The global market sentiment has been gaining positive momentum, buoyed by the recent release of lower-than-expected monthly Consumer Price Index and Retail Sales data in the United States (US). This has increased the likelihood of multiple rate cuts by the Federal Reserve (Fed) in 2024, which has in turn undermined the US Dollar (USD). The upbeat market sentiment and bearish US dollar both contribute to helping the AUD/USD pair regained its lost traction.
On the data front, the US Consumer Price Index (CPI) for April showed a slower rise of 0.3% from the previous month, below the expected 0.4%. Retail Sales remained flat, missing the anticipated 0.4% increase. The Producer Price Index (PPI) saw a stronger uptick of 0.5% compared to March's -0.1% decline, surpassing expectations. Core PPI, excluding food and energy prices, also rose by 0.5%, exceeding forecasts of 0.2%.
Therefore, the positive global market sentiment and weakening US dollar, fueled by lower-than-expected US economic data, helped the AUD/USD pair regain lost ground.
Negative Impact on AUD due to Cautious RBA Outlook and Mixed Employment Data
On the negative side, the Australian Dollar (AUD) lost ground recently due to a more cautious outlook from the Reserve Bank of Australia (RBA) about its monetary policies. This shift followed mixed employment data and slightly lower-than-expected wage increases in the first quarter, which contributed to a decrease in Australia’s 10-year government bond yield to around 4.2%. These factors create a dovish sentiment, putting pressure on the AUD/USD pair and ending its three-day winning streak.
On the data front, the Australian Bureau of Statistics reported that in April, the number of employed people in Australia increased by 38.5 thousand to reach 14.3 million, surpassing market expectations of 23.7 thousand and reversing a slight decline seen in March. However, the unemployment rate also rose to 4.1% from the previous 3.9%, marking the highest rate since January. This increase meant 30.3 thousand more individuals were unemployed, bringing the total to 604.2 thousand.
Therefore, the mixed data, with stronger employment figures but a higher unemployment rate, added to the cautious RBA stance, weighing on the AUD/USD pair and ending its recent gains.
AUD/USD - Technical Analysis
AUD/USD is currently trading at $0.66823, down 0.14% from the previous session. The pivot point is situated at $0.6714. Immediate resistance levels are at $0.6734, $0.6759, and $0.6779.
On the downside, immediate support levels are at $0.6649, $0.6614, and $0.6579. These levels are critical for traders as they indicate potential points of breakout or breakdown, guiding trading decisions.
The Relative Strength Index (RSI) is currently at 66, suggesting that the market is approaching overbought conditions. This could imply that a bearish correction is likely if buying pressure diminishes. The 50-day Exponential Moving Average (EMA) is at $0.6616, which supports the medium-term bullish trend.
Given these technical indicators, a strategic trading approach is advisable. Selling below the pivot point of $0.67126 could be beneficial, targeting a take-profit level of $0.66483 and setting a stop-loss at $0.67500.
This strategy hinges on the expectation that if AUD/USD fails to surpass the immediate resistance level, it may correct downward toward the support levels.
The RSI nearing overbought territory suggests that the current downward trend might continue if resistance levels hold. A failure to breach the resistance at $0.6734 could result in a pullback toward the support at $0.6649 or even lower.
Traders should remain vigilant for any shifts in market sentiment that could alter the trading landscape.
In summary, while AUD/USD is currently experiencing downward pressure, technical indicators suggest the possibility of further bearish movement. A strategic approach would be to sell below $0.67126 with a take-profit target at $0.66483 and a stop-loss at $0.67500.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trades at $0.66823, down 0.14%, with key resistance at $0.6734.
- RSI at 66 indicates nearing overbought conditions, suggesting potential further bearish movement.
- Strategic sell below $0.67126 with take-profit at $0.66483 and stop-loss at $0.67500.
AUD/USD is currently trading at $0.66823, down 0.14% from the previous session. The pivot point is situated at $0.6714. Immediate resistance levels are at $0.6734, $0.6759, and $0.6779.
On the downside, immediate support levels are at $0.6649, $0.6614, and $0.6579. These levels are critical for traders as they indicate potential points of breakout or breakdown, guiding trading decisions.
The Relative Strength Index (RSI) is currently at 66, suggesting that the market is approaching overbought conditions. This could imply that a bearish correction is likely if buying pressure diminishes. The 50-day Exponential Moving Average (EMA) is at $0.6616, which supports the medium-term bullish trend.
Given these technical indicators, a strategic trading approach is advisable. Selling below the pivot point of $0.67126 could be beneficial, targeting a take-profit level of $0.66483 and setting a stop-loss at $0.67500.
This strategy hinges on the expectation that if AUD/USD fails to surpass the immediate resistance level, it may correct downward toward the support levels.
The RSI nearing overbought territory suggests that the current downward trend might continue if resistance levels hold. A failure to breach the resistance at $0.6734 could result in a pullback toward the support at $0.6649 or even lower.
Traders should remain vigilant for any shifts in market sentiment that could alter the trading landscape.
In summary, while AUD/USD is currently experiencing downward pressure, technical indicators suggest the possibility of further bearish movement. A strategic approach would be to sell below $0.67126 with a take-profit target at $0.66483 and a stop-loss at $0.67500.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.67126
Take Profit – 0.66483
Stop Loss – 0.67500
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$643/ -$374
Profit & Loss Per Mini Lot = +$64/ -$37
AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trading at $0.66072, down 0.10%
- Pivot point at $0.6647 with immediate resistance at the same level
- Entry price for buying above $0.66014, with take profit at $0.66469 and stop loss at $0.65713
The AUD/USD pair is trading at $0.66072, down 0.10% in the latest session. The 4-hour chart highlights a pivot point at $0.6647, which serves as a critical level for traders.
Immediate resistance is found at the pivot point, followed by subsequent resistance levels at $0.6691 and $0.6727. On the downside, immediate support is observed at $0.6559, with further support at $0.6517 and $0.6467.
The technical indicators provide additional context for the current market conditions. The Relative Strength Index (RSI) is at 53, indicating a slightly bullish sentiment but not yet in overbought territory.
The 50-day Exponential Moving Average (EMA) is positioned at $0.6596, acting as a dynamic support level slightly below the current price, which can provide a buffer against further declines.
Based on the technical setup, the strategy suggests an entry price for buying above $0.66014, with a take-profit target at $0.66469 and a stop loss at $0.65713.
This approach takes into account the potential for upward movement while managing risk effectively with the stop loss placed just below the recent support level.
A break above the pivot point at $0.6647 could indicate further bullish momentum, propelling prices towards the next resistance levels of $0.6691 and $0.6727. Conversely, if the price falls below immediate support at $0.6559, the next support levels at $0.6517 and $0.6467 will be crucial to watch for potential stabilization.
Overall, the outlook for AUD/USD remains cautiously optimistic above the entry price of $0.66014.
AUD/USD - Trade Ideas
Entry Price – Buy Above 0.66014
Take Profit – 0.66469
Stop Loss – 0.65713
Risk to Reward – 1: 1.5
Profit & Loss Per Standard Lot = +$455/ -$301
Profit & Loss Per Mini Lot = +$45/ -$30
AUD/USD Price Analysis – May 14, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair struggled to gain positive traction and remained around the 0.6610 level, reaching an intraday low of 0.6598. The downward trend could be attributed to several factors, including a strengthening US dollar and risk-off market sentiment.
Additionally, the RBA's less hawkish stance has contributed to undermining the AUD/USD pair. Furthermore, previously released weak business conditions and low confidence indicate a slowing economy, which has dampened investor optimism about Australia's economic outlook and further weakened the AUD/USD pair.
Impact of RBA Decision and Economic Factors on AUD/USD Pair
On the AUD front, the losses in the AUD/USD pair were further bolstered following the Reserve Bank of Australia's decision to maintain interest rates at 0.35% last week, which dampened expectations for a more aggressive monetary policy stance despite stronger inflation data.
On the data front, the National Australia Bank's Business Conditions index declined to 7 in April from the previous 9, while Business Confidence remained unchanged at 1. Australia's Treasury predicts that inflation will return to the RBA's target range by late 2024, consistent with earlier forecasts.
However, the Commonwealth Bank of Australia (CBA) adjusted its AUD forecast for the end of 2024 downwards to 0.69 due to factors such as the interest rate differential and the high yields on US Treasury bonds, which bolster the US Dollar.
Hence, the AUD/USD pair declined due to the RBA's neutral stance, steady rates, weak business conditions, and CBA's lowered AUD forecast, reflecting challenges against a stronger USD.
Impact of US Dollar Strength and Economic Indicators on AUD/USD Pair
On the US front, the US Dollar strengthened as Federal Reserve officials stressed the importance of maintaining higher interest rates due to ongoing worries about inflation. Fed Vice Chair Philip Jefferson's comments on Monday supported this stance, suggesting that rates should remain unchanged until signs of inflation moderating appear.
Investors are anticipating Tuesday's Producer Price Index (PPI) report, which is a significant economic gauge. If it indicates increased inflationary pressures, it could bolster the US Dollar. Additionally, a survey by the Federal Reserve Bank of New York revealed a rise in one-year inflation expectations to 3.3%, further highlighting concerns about inflation.
Neel Kashkari, President of the Minneapolis Federal Reserve, cautioned against tightening monetary policy too quickly, suggesting that despite certain thresholds being met, another rate hike is possible. Meanwhile, San Francisco Fed President Mary Daly emphasized the necessity of maintaining a prolonged restrictive policy to reach the Fed's inflation targets.
On the data front, the University of Michigan Consumer Sentiment Index fell to 67.4 in May, its lowest level in six months, below the expected 76 reading. Additionally, the UoM 5-year Consumer Inflation Expectation increased to 3.1%, reaching a six-month high compared to the previous 3.0%.
Therefore, the US Dollar's strength, supported by Fed officials' stance on interest rates and inflation concerns, coupled with weaker consumer sentiment data, may further pressure the AUD/USD pair amid heightened demand for the USD as a safer currency.
AUD/USD - Technical Analysis
The AUD/USD pair is trading at $0.66072, down 0.10% in the latest session. The 4-hour chart highlights a pivot point at $0.6647, which serves as a critical level for traders. Immediate resistance is found at the pivot point, followed by subsequent resistance levels at $0.6691 and $0.6727. On the downside, immediate support is observed at $0.6559, with further support at $0.6517 and $0.6467.
The technical indicators provide additional context for the current market conditions. The Relative Strength Index (RSI) is at 53, indicating a slightly bullish sentiment but not yet in overbought territory.
The 50-day Exponential Moving Average (EMA) is positioned at $0.6596, acting as a dynamic support level slightly below the current price, which can provide a buffer against further declines.
Based on the technical setup, the strategy suggests an entry price for buying above $0.66014, with a take-profit target at $0.66469 and a stop loss at $0.65713. This approach takes into account the potential for upward movement while managing risk effectively with the stop loss placed just below the recent support level.
A break above the pivot point at $0.6647 could indicate further bullish momentum, propelling prices towards the next resistance levels of $0.6691 and $0.6727.
Conversely, if the price falls below immediate support at $0.6559, the next support levels at $0.6517 and $0.6467 will be crucial to watch for potential stabilization.
Overall, the outlook for AUD/USD remains cautiously optimistic above the entry price of $0.66014.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trades slightly down at $0.65802, hovering near the 50 EMA support level at $0.6564.
- Resistance levels to watch are $0.6602, $0.6647, and $0.6691; support solidifies around $0.6467.
- Recommended trade: Buy above $0.65623, targeting $0.66121 with a stop loss at $0.65322 to mitigate risks.
The Australian Dollar (AUD/USD) is experiencing slight downward pressure today, trading at $0.65802, a decrease of 0.01%. The currency pair is currently navigating just above a critical 50-Day Exponential Moving Average (EMA) positioned at $0.6564. This level is noteworthy as it has recently served as a baseline for the pair’s support, suggesting that the AUD/USD could find stability and potentially rebound from these levels.
Looking at the technical framework, the pivot point is set at $0.6612. Immediate resistance lies slightly lower at $0.6602, which the pair needs to overcome to aim for higher resistance levels at $0.6647 and $0.6691. On the downside, the immediate support is significantly lower at $0.6504, indicating a potential area where buying interest might resurface. Additional supports are identified at $0.6467, which is notably listed twice, suggesting a strong support zone that could be critical in preventing further declines.
The Relative Strength Index (RSI) of 49 indicates a nearly balanced market dynamic, with neither overbought nor oversold conditions present, providing room for both upside and downside movements. Based on the current market setup and the proximity of the price to the 50 EMA, a cautious buying strategy could be considered. Entering a long position above $0.65623 with a target of $0.66121 and a stop loss at $0.65322 offers a structured approach to capitalize on potential upward movements while managing risk effectively.
AUD/USD - Trade Ideas
Entry Price – Buy Above 0.65623
Take Profit – 0.66121
Stop Loss – 0.65322
Risk to Reward – 1: 1.6
Profit & Loss Per Standard Lot = +$498/ -$301
Profit & Loss Per Mini Lot = +$49/ -$30
AUD/USD Price Analysis – May 09, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair continued its losing streak, remaining well-offered around the 0.6577 level and hitting an intra-day low of 0.6565. The losses were driven by the less hawkish stance of the RBA, which tended to undermine the Australian currency and contributed to the weakness of the AUD/USD pair. Additionally, previously released downbeat Australian Retail Sales data was seen as another key factor keeping the pair down.
Moreover, the risk-off market sentiment triggered by ongoing tensions in the Middle East played a major role in keeping the AUD/USD pair down by undermining the riskier Australian dollar. Conversely, the bullish US dollar, supported by the hawkish Fed stance regarding interest rates, put downward pressure on the AUD/USD pair.
RBA's Dovish Stance and Weaker Retail Sales Weigh on AUD/USD Pair
On the AUD front, the Reserve Bank of Australia (RBA) adopted a cautious approach, even though recent inflation data had exceeded expectations. The RBA kept the interest rate unchanged at 4.35%, taking a wait-and-see stance. Despite the increase in March's inflation rate, RBA Governor Michele Bullock remains cautious, noting the ongoing risks associated with inflation.
She believes that the current interest rates are appropriate to bring inflation back to the 2-3% target range by the second half of 2025. However, Societe Generale expressed concerns, anticipating a potential slowdown in Australian economic growth. They predict downside risks, citing the impact of RBA rate hikes on the economy.
On the data front, Australian Retail Sales fell by 0.4% in the first quarter of 2024, reversing the 0.4% growth seen in the previous quarter, indicating a decline in consumer spending. Meanwhile, the ASX 200 Index ended its five-day winning streak, largely due to a drop in bank stocks caused by regulatory issues. This decline was also influenced by a downturn in the U.S. markets, where investors were unsettled by mixed corporate earnings and the Federal Reserve's plans to maintain higher interest rates for a longer period. These factors contribute to a more cautious market environment in Australia.
Consequently, the RBA's cautious stance and concerns about economic growth, along with weaker retail sales data and market uncertainty, may put downward pressure on the AUD/USD pair, leading to a decline in its value.
Fed's Extended Higher Interest Rates Strengthen US Dollar, Weakening AUD/USD Pair
On the US front, the US Dollar has strengthened as the Federal Reserve (Fed) is expected to maintain higher interest rates for an extended period, pushing up US Treasury yields and supporting the US Dollar. This expectation is fueled by statements from influential Fed officials like Susan Collins from Boston, who said it could take longer to reduce inflation to the target of 2%. Similarly, New York's John Williams and Minneapolis's Neel Kashkari have noted that interest rates might remain elevated for an extended time.
Therefore, the US Dollar's strength due to the Fed's extended higher interest rates and rising US Treasury yields is likely to put downward pressure on the AUD/USD pair, leading to a weaker Australian dollar.
AUD/USD - Technical Analysis
The Australian Dollar (AUD/USD) is experiencing slight downward pressure today, trading at $0.65802, a decrease of 0.01%. The currency pair is currently navigating just above a critical 50-Day Exponential Moving Average (EMA) positioned at $0.6564. This level is noteworthy as it has recently served as a baseline for the pair’s support, suggesting that the AUD/USD could find stability and potentially rebound from these levels.
Looking at the technical framework, the pivot point is set at $0.6612. Immediate resistance lies slightly lower at $0.6602, which the pair needs to overcome to aim for higher resistance levels at $0.6647 and $0.6691. On the downside, the immediate support is significantly lower at $0.6504, indicating a potential area where buying interest might resurface. Additional supports are identified at $0.6467, which is notably listed twice, suggesting a strong support zone that could be critical in preventing further declines.
The Relative Strength Index (RSI) of 49 indicates a nearly balanced market dynamic, with neither overbought nor oversold conditions present, providing room for both upside and downside movements. Based on the current market setup and the proximity of the price to the 50 EMA, a cautious buying strategy could be considered. Entering a long position above $0.65623 with a target of $0.66121 and a stop loss at $0.65322 offers a structured approach to capitalize on potential upward movements while managing risk effectively.
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AUD/USD Price Analysis – May 7, 2024
Daily Price Outlook
During the European trading sesion, the AUD/USD currency pair failed to maintain its upward rally and turned bearish around the 0.6602 level, hitting the intraday low of 0.6586.
However, the reason for its downward trend could be attributed to multiple factors, including the renewed strength of the US dollar, which gained traction due to the risk-off market sentiment, boosting safe-haven assets like the US dollar.
Meanwhile, the risk-off market sentiment, triggered by ongoing tensions in the Middle East, was seen as another key factor that undermined the riskier Australian dollar and contributed to the AUD/USD pair's losses.
In addition to this, the RBA's decision to keep rates unchanged, despite market expectations of a hawkish stance due to high inflation, weakened the Australian dollar and contributed to the AUD/USD pair's losses.
Australia's Monetary Policy and Economic Data Impact on AUD/USD
On the Australian front, the Reserve Bank of Australia (RBA) kept its interest rate steady at 4.35%, surprising many who expected a more hawkish stance after inflation data came in higher than anticipated. This was the fifth consecutive quarter of declining inflation, but the rise in the Consumer Price Index (CPI) in March surprised many people.
RBA Governor Michele Bullock highlighted the need to monitor inflation risks and outlined the bank's plan to bring inflation back to its 2-3% target by 2025. The Judo Bank Australia Composite PMI for April showed slower growth in the private sector, with manufacturing output falling while services grew.
Analysts at Commonwealth Bank and Westpac predict the RBA's rate to peak at 4.35% in November 2023 and then drop to 3.10% by December 2025.
On the data front, Australia's inflation rate (YoY), as measured by TD Securities and the University of Melbourne, decreased slightly to 3.7% in April from 3.8% the previous month, while the monthly inflation rate remained steady at 0.1%. In China, the Caixin Services Purchasing Managers' Index (PMI) for April dropped a bit to 52.5 from 52.7 in March.
Despite the slight dip, it still marks the 16th consecutive month of growth in China's services sector, which is significant for Australia's economy. As one of China's major exporters, Australia's market might benefit from continued expansion in Chinese services activity.
Therefore, the RBA's decision to keep interest rates steady, coupled with slower growth in Australia's private sector, has weakened the Australian dollar, putting downward pressure on the AUD/USD pair. However, strong Chinese service activity might offer some support due to Australia's trade ties with China.
US Dollar Index Weakness and Its Effect on the AUD/USD Pair
On the US front, the broad-based US dollar has reversed its losses despite softer US labor data being released on Friday. This has fueled speculation about potential interest rate cuts by the Federal Reserve in 2024.
Richmond Federal Reserve President Thomas Barkin commented that high interest rates could slow US economic growth and reduce inflation, bringing it closer to the Fed's 2% target.
He also mentioned that the strong labor market gives the Fed time to ensure inflation is trending down before cutting rates. However, he warned that continued inflation in the housing and services sectors could keep prices high.
Therefore, the renewed strength of the US dollar due to speculation about future Fed rate cuts could put downward pressure on the AUD/USD pair, as Australia's currency may weaken compared to the US dollar, especially if US interest rates remain high to combat inflation.
AUD/USD - Technical Analysis
In today’s foreign exchange market, the AUD/USD pair is experiencing a notable decline, currently trading at $0.65977, down by 0.43%. This downward movement places the pair just above a significant pivot point at $0.65738, which serves as a potential turning point for future price movements.
The currency pair faces immediate resistance at $0.66460. If overcome, further hurdles await at $0.66907 and $0.67416. These resistance levels will play a critical role in determining the pair's short-term trajectory, especially if bullish momentum resumes.
Conversely, the AUD/USD has established substantial support at $0.65192, with additional lower supports at $0.64669 and $0.64110. These points could provide significant bounce-back potential should the pair continue its descent.
Technical indicators offer a mixed but slightly bearish view. The Relative Strength Index (RSI) is moderately placed at 54, suggesting that there is neither excessive bullish nor bearish momentum currently influencing the market.
However, the proximity of the 50-Day Exponential Moving Average (EMA) at $0.65531 just below the pivot reinforces the pivotal nature of current price levels.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Consider short positions if AUD/USD breaks below the pivot point of $0.65738, aiming for an initial target at $0.65192 and adjusting stops to the $0.66344 resistance level.
- Monitor resistance at $0.66460; breaching this could invalidate the bearish outlook and shift momentum upwards.
- Stay cautious around the 50-Day EMA, as it could act as a dynamic support influencing the pair’s stability.
In today’s foreign exchange market, the AUD/USD pair is experiencing a notable decline, currently trading at $0.65977, down by 0.43%. This downward movement places the pair just above a significant pivot point at $0.65738, which serves as a potential turning point for future price movements.
The currency pair faces immediate resistance at $0.66460. If overcome, further hurdles await at $0.66907 and $0.67416. These resistance levels will play a critical role in determining the pair's short-term trajectory, especially if bullish momentum resumes.
Conversely, the AUD/USD has established substantial support at $0.65192, with additional lower supports at $0.64669 and $0.64110. These points could provide significant bounce-back potential should the pair continue its descent.
Technical indicators offer a mixed but slightly bearish view. The Relative Strength Index (RSI) is moderately placed at 54, suggesting that there is neither excessive bullish nor bearish momentum currently influencing the market.
However, the proximity of the 50-Day Exponential Moving Average (EMA) at $0.65531 just below the pivot reinforces the pivotal nature of current price levels.
AUD/USD - Trade Ideas
Entry Price – Sell Below 0.66344
Take Profit – 0.65738
Stop Loss – 0.66755
Risk to Reward – 1: 1.4
Profit & Loss Per Standard Lot = +$606/ -$411
Profit & Loss Per Mini Lot = +$60/ -$41