AUD/USD Price Analysis – July 11, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward momentum, staying strong around the 0.6759 level and peaking at an intraday high of 0.6764. This upward movement can be attributed to several factors.
Firstly, there is increasing speculation that the Reserve Bank of Australia (RBA) may postpone joining the global trend of interest rate cuts or even consider raising rates, which has bolstered demand for the Australian dollar and supported gains in AUD/USD.
Secondly, weakness in the US dollar also contributed as market expectations lean towards the Federal Reserve initiating interest rate cuts starting in September, undermining the greenback's strength.
Looking ahead, traders are exercising caution in taking significant positions as they await the release of the latest consumer inflation figures from the United States (US).
The upcoming US CPI report is expected to be closely monitored for insights into the Federal Reserve's approach to potential rate cuts, which could influence demand for the US dollar and significantly impact commodity markets.
Impact of Economic Data and Speculation on AUD/USD Pair
Despite soft Consumer Inflation Expectations reported by the Melbourne Institute for July, reflecting subdued consumer outlook on inflation over the next year, the AUD/USD pair has displayed upward movement.
This rise can be attributed to increasing speculation that the Reserve Bank of Australia (RBA) may delay joining the global trend of interest rate cuts or possibly even consider raising rates again.
Recent data indicates a decline in Australian consumer confidence for July, contrasting with a surge in business sentiment to a 17-month high in June, highlighting divergent economic outlooks.
On the data front, Australia's Consumer Inflation Expectations for July eased slightly to 4.3% from the previous 4.4%. Meanwhile, China, a key trade partner, reported a 0.2% annual increase in its Consumer Price Index (CPI) for June, down from 0.3% in May and below market expectations of 0.4%.
On a monthly basis, Chinese CPI declined by 0.2% in June, contrasting with a 0.1% decrease in May and missing the anticipated 0.1% drop.
Additionally, Australia's Westpac Consumer Confidence fell by 1.1% in July following a 1.7% increase in June, marking the fifth decline this year amid concerns over elevated inflation, interest rates, and economic growth.
Therefore, the AUD/USD pair exhibited upward movement, driven by speculation that the RBA may postpone rate cuts or even consider raising rates. The contrasting economic outlooks, with lower consumer confidence but higher business sentiment, also played a role in shaping its trajectory.
Impact of Fed Expectations and CPI Data on AUD/USD Pair
On the US front, the broad-based US dollar continues to weaken and remains bearish amid mounting expectations that the Federal Reserve will commence interest rate cuts starting in September, potentially followed by additional cuts in December.
Fed Chair Jerome Powell's recent remarks have underscored this sentiment, highlighting the Fed's commitment to maintaining price stability and contemplating a move towards neutral interest rates by late 2024 as inflation trends evolve. Despite acknowledging signs of economic moderation,
On the data front, the headline Consumer Price Index (CPI) is anticipated to have risen by 0.1% in June, marking a slight easing in the annual rate from 3.3% to 3.1%. Meanwhile, Core CPI, which excludes Food and Energy prices, is expected to maintain a steady year-over-year rate of 3.4%.
Therefore, the AUD/USD pair could find support as the US dollar weakens due to expectations of Federal Reserve rate cuts, bolstered by Chair Powell's comments on stable inflation and possible interest rate adjustments. Economic data indicating moderated CPI rates in the US could further impact market sentiment.
AUD/USD - Technical Analysis
The Australian dollar is showing signs of strength against the U.S. dollar, trading up 0.16% at $0.6758. A closer look at the 4-hour chart reveals a bullish bias, with the Aussie perched just above a pivot point of $0.6752.
This level now serves as a crucial support zone, with a break below potentially triggering a move towards the next support levels at $0.6732, $0.6712, and $0.6697.
Conversely, the bulls have their eyes on the immediate resistance at $0.6767. A decisive move above this level could open the door for a rally towards the next resistance targets at $0.6787 and $0.6804.
The 50-day Exponential Moving Average (EMA), currently at $0.6742, is also acting as dynamic support, further reinforcing the bullish outlook.
The Relative Strength Index (RSI) is currently at 64, suggesting some room for further upside before entering overbought territory. However, traders should remain vigilant for any signs of exhaustion or reversal in momentum.
Given the current technical setup, traders could consider initiating long positions above $0.67518, with a stop-loss order placed below $0.67321. The initial target for profit-taking would be the resistance level at $0.67870.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trades above key pivot point, indicating bullish bias.
- Resistance levels at $0.6767, $0.6787, and $0.6804 pose upside potential.
- RSI suggests some room for further upside, but traders should watch for signs of reversal.
The Australian dollar is showing signs of strength against the U.S. dollar, trading up 0.16% at $0.6758. A closer look at the 4-hour chart reveals a bullish bias, with the Aussie perched just above a pivot point of $0.6752.
This level now serves as a crucial support zone, with a break below potentially triggering a move towards the next support levels at $0.6732, $0.6712, and $0.6697.
Conversely, the bulls have their eyes on the immediate resistance at $0.6767. A decisive move above this level could open the door for a rally towards the next resistance targets at $0.6787 and $0.6804.
The 50-day Exponential Moving Average (EMA), currently at $0.6742, is also acting as dynamic support, further reinforcing the bullish outlook.
The Relative Strength Index (RSI) is currently at 64, suggesting some room for further upside before entering overbought territory. However, traders should remain vigilant for any signs of exhaustion or reversal in momentum.
Given the current technical setup, traders could consider initiating long positions above $0.67518, with a stop-loss order placed below $0.67321. The initial target for profit-taking would be the resistance level at $0.67870.
AUD/USD - Trade Ideas
Entry Price – Buy Above 0.67518
Take Profit – 0.67870
Stop Loss – 0.67321
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$352/ -$197
Profit & Loss Per Mini Lot = +$35/ -$19
AUD/USD Price Analysis – July 09, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well-bid around the 0.6738 level, hitting an intraday high of 0.6748.
The upward trend can be attributed to several factors, including rising expectations that the Reserve Bank of Australia (RBA) might raise interest rates again, spurred by strong inflation data for May. This has bolstered the AUD currency and contributed to gains in the AUD/USD pair.
Additionally, the upticks in the AUD/USD pair were further supported by weakness in the US dollar, which lost ground following soft US employment data. This has led traders to speculate that the Federal Reserve (Fed) might reduce interest rates sooner rather than later.
Impact of RBA Policy and Economic Indicators on AUD/USD Pair
On the AUD front, the currency's recent strength is linked to expectations that the Reserve Bank of Australia (RBA) may delay joining global rate cuts or even consider raising rates again, buoyed by strong May inflation figures.
Australia's 10-year government bond yield holding steady around 4.4% has also attracted foreign investment seeking stability amidst political uncertainties in the US and Europe.
The RBA's June Meeting Minutes highlighted their focus on monitoring inflation risks, noting that a significant price increase could necessitate much higher interest rates in response. These factors combined have supported the AUD's upward momentum against major currencies like the USD.
On the data front, Australia's Westpac Consumer Confidence dropped by 1.1% in July, reversing June's 1.7% increase, marking the fifth decline in 2024. This decline reflects ongoing concerns over high inflation, elevated interest rates, and a slow economy.
According to the Australian Bureau of Statistics, the country's trade surplus for May came in at A$5,773 million ($3,868 million), below expectations of A$6,678 million and down from A$6,548 million previously.
On a positive note, Australia's Retail Sales rose by 0.6% month-on-month in May, surpassing expectations of a 0.2% increase, indicating a stronger level of consumer spending compared to the previous month.
Therefore, the AUD's recent strength, bolstered by potential RBA rate stance and strong inflation data, has lifted it against the USD. Consumer confidence and trade surplus data, however, reflect mixed economic sentiment impacting AUD/USD trends.
Impact of US Economic Data and Fed Speculations on AUD/USD Pair
On the US front, the broad-based US dollar is losing momentum as soft employment data fuels speculation of earlier rate cuts by the Federal Reserve (Fed). Traders are now pricing in a 76.2% probability of a rate cut in September, up from 65.5% last week, according to the CME's FedWatch Tool.
Federal Reserve Chair Jerome Powell is scheduled to testify on the economy and monetary policy to Congress, where his remarks could influence market expectations.
Meanwhile, Federal Reserve Bank of Chicago President Austan Goolsbee remarked on the challenge of returning inflation to 2%, while Powell indicated the Fed's commitment to addressing disinflationary pressures.
On the data front, US Nonfarm Payrolls rose by 206,000 in June, exceeding expectations of 190,000, following a gain of 218,000 in May. The Unemployment Rate ticked up to 4.1% from May's 4.0%, while Average Hourly Earnings decreased to a 3.9% year-over-year growth rate in June, aligning with market forecasts.
Therefore, the AUD/USD pair could see upward pressure as the US dollar weakens on speculation of earlier Fed rate cuts due to softer employment data, increasing the likelihood of a stronger Australian dollar against the USD.
AUD/USD - Technical Analysis
The AUD/USD is currently trading at $0.67361 on the 2-hour chart. The pivot point is positioned at $0.67207 (Green line). Immediate resistance is observed at $0.67515, with further resistance at $0.67670 and $0.67867.
On the downside, immediate support is located at $0.67221, followed by $0.67029 and $0.66821. The 50-day Exponential Moving Average (EMA) is positioned at $0.67207, acting as a significant level for potential upward or downward movements.
The Relative Strength Index (RSI) is currently at 59.96, indicating a neutral to slightly bullish market sentiment.
This level suggests a balanced market, with potential for upward movements if the RSI increases further. The 50-day EMA at $0.67207 aligns closely with the current price, providing a crucial pivot point for traders to watch.
For traders, a strategic entry point is recommended above $0.67221, with a take profit level set at $0.67670 and a stop loss at $0.67029. Maintaining prices above the pivot point of $0.67207 could indicate a bullish trend continuation, whereas a move below this level might suggest a bearish reversal.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trading at $0.67361; pivot point at $0.67207.
- Immediate resistance at $0.67515; support at $0.67221.
- RSI at 59.96, indicating neutral to slightly bullish conditions.
The AUD/USD is currently trading at $0.67361 on the 2-hour chart. The pivot point is positioned at $0.67207 (Green line). Immediate resistance is observed at $0.67515, with further resistance at $0.67670 and $0.67867.
On the downside, immediate support is located at $0.67221, followed by $0.67029 and $0.66821. The 50-day Exponential Moving Average (EMA) is positioned at $0.67207, acting as a significant level for potential upward or downward movements.
The Relative Strength Index (RSI) is currently at 59.96, indicating a neutral to slightly bullish market sentiment.
This level suggests a balanced market, with potential for upward movements if the RSI increases further. The 50-day EMA at $0.67207 aligns closely with the current price, providing a crucial pivot point for traders to watch.
For traders, a strategic entry point is recommended above $0.67221, with a take profit level set at $0.67670 and a stop loss at $0.67029. Maintaining prices above the pivot point of $0.67207 could indicate a bullish trend continuation, whereas a move below this level might suggest a bearish reversal.
AUD/USD - Trade Ideas
Entry Price – Buy Above 0.67221
Take Profit – 0.67670
Stop Loss – 0.67029
Risk to Reward – 1: 2.3
Profit & Loss Per Standard Lot = +$449/ -$19
Profit & Loss Per Mini Lot = +$44/ -$19
AUD/USD Price Analysis – July 04, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained a bullish stance, consolidating around the 0.6716 level and reaching an intraday high of 0.6722.
The upward momentum was driven by multiple factors, including positive Australian economic data, particularly encouraging Retail Sales figures for May, which bolstered expectations of a potential rate hike by the Reserve Bank of Australia (RBA).
This provided substantial support to the Australian dollar (AUD). Additionally, the US dollar (USD) weakened as markets increasingly priced in the likelihood of Federal Reserve (Fed) interest rate cuts, further enhancing the AUD/USD pair's gains. Moreover, risk-on sentiment in the markets also contributed to the pair's upward movement.
Impact of Strong Australian Economic Data on AUD/USD Pair
On the AUD front, the Australian Dollar (AUD) rose following stronger-than-expected Retail Sales data for May, boosting expectations of a potential rate hike by the Reserve Bank of Australia (RBA).
The robust growth in Retail Sales suggests economic strength, prompting discussions that the RBA might consider raising interest rates as soon as August. This positive economic indicator has bolstered confidence in the AUD, reflecting market optimism about Australia's economic outlook amidst global uncertainties.
On the data front, Australia's Retail Sales for May showed a 0.6% month-on-month increase, up from 0.1% previously, as reported by the Australian Bureau of Statistics (ABS) on Wednesday.
The Australian Dollar's strength was also supported by slight improvements in Judo Bank's Australia Purchasing Managers Index (PMI) for June.
Therefore, the stronger Retail Sales and improved economic outlook have lifted the AUD/USD pair, fueled by expectations of potential RBA rate hikes and positive market sentiment towards Australia's economy.
Impact of US Economic Data and Fed Stance on AUD/USD Pair
On the US front, the previously released weaker-than-expected economic data continues to weigh on the US dollar, which was seen as another key factor that kept the AUD/USD pair higher.
However, Federal Reserve (Fed) officials' cautious stance could strengthen the USD and limit gains in the AUD/USD pair. Chicago Fed President Austan Goolsbee remarked early Thursday that achieving 2% inflation will require time, highlighting ongoing economic uncertainties.
Meanwhile, the recent minutes from the FOMC's June meeting revealed that Fed policymakers lack confidence in the need for an immediate interest rate cut, preferring a data-dependent approach to monetary policy.
Markets now anticipate a 66% probability of a 25 basis points Fed rate cut in September, up slightly from earlier expectations.
On the economic front, the private sector added 150,000 jobs in June, slightly less than expected and down from 157,000 in May. At the same time, more people filed for unemployment benefits, reaching the highest level in 2-1/2 years, showing weakening job market conditions.
Furthermore, the Services Purchasing Managers' Index (PMI) for June dropped to 48.8, signaling a contraction in the services sector and hitting its lowest point since May 2020, much lower than predicted.
Therefore, the weaker US economic data and cautious Fed stance could support the AUD/USD pair, while signs of job market weakness and a contracting services sector in the US may limit the pair's upside trend.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.67156, marking a modest gain of 0.11% in the early trading session. The 4-hour chart reveals pivotal technical levels that traders should watch closely.
The pivot point at $0.6733 is critical, acting as a potential fulcrum for either a bullish continuation or a bearish reversal. Immediate resistance levels are seen at $0.6749, $0.6767, and $0.6787.
Breaking above these resistance levels could open the path for further upward momentum, challenging higher price territories.
Conversely, support levels are identified at $0.6701, with subsequent supports at $0.6680 and $0.6655.
These levels could offer buying opportunities should the price experience a pullback. Technical indicators provide a mixed outlook; the Relative Strength Index (RSI) is currently at 66, nearing the overbought zone.
An RSI close to 70 typically indicates overvaluation, suggesting a possible bearish correction in the near term.
The 50-day Exponential Moving Average (EMA) stands at $0.6663, reinforcing a bullish sentiment as long as the price remains above this average. The EMA acts as dynamic support, and maintaining a price above this level could sustain the bullish bias.
Given the current market setup, a conservative trading strategy would be to enter a long position if the price breaks above $0.67008.
Setting a take-profit target at $0.67321 aligns with the pivot point, ensuring a favorable risk-reward ratio while capturing potential upside movement. A stop-loss at $0.66809, just below immediate support, limits downside risk from unexpected price dips.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trading at $0.67156, up 0.11%; pivot point at $0.6733 could signal reversal or continuation.
- RSI at 66 suggests near-overbought conditions; potential bearish correction if resistance at $0.6749, $0.6767, $0.6787 holds.
- 50 EMA at $0.6663 indicates bullish trend; a break above $0.67008 may trigger buying with targets at $0.67321.
The AUD/USD pair is currently trading at $0.67156, marking a modest gain of 0.11% in the early trading session. The 4-hour chart reveals pivotal technical levels that traders should watch closely.
The pivot point at $0.6733 is critical, acting as a potential fulcrum for either a bullish continuation or a bearish reversal. Immediate resistance levels are seen at $0.6749, $0.6767, and $0.6787. Breaking above these resistance levels could open the path for further upward momentum, challenging higher price territories.
Conversely, support levels are identified at $0.6701, with subsequent supports at $0.6680 and $0.6655. These levels could offer buying opportunities should the price experience a pullback. Technical indicators provide a mixed outlook; the Relative Strength Index (RSI) is currently at 66, nearing the overbought zone.
An RSI close to 70 typically indicates overvaluation, suggesting a possible bearish correction in the near term.
The 50-day Exponential Moving Average (EMA) stands at $0.6663, reinforcing a bullish sentiment as long as the price remains above this average. The EMA acts as dynamic support, and maintaining a price above this level could sustain the bullish bias.
Given the current market setup, a conservative trading strategy would be to enter a long position if the price breaks above $0.67008. Setting a take-profit target at $0.67321 aligns with the pivot point, ensuring a favorable risk-reward ratio while capturing potential upside movement.
A stop-loss at $0.66809, just below immediate support, limits downside risk from unexpected price dips.
AUD/USD - Trade Ideas
Entry Price – Buy Above 0.67008
Take Profit – 0.67321
Stop Loss – 0.66809
Risk to Reward – 1: 1.5
Profit & Loss Per Standard Lot = +$313/ -$199
Profit & Loss Per Mini Lot = +$31/ -$19
AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD trading at $0.66514, down 0.17%
- Pivot point at $0.6640 with immediate resistance at $0.6660 and support at $0.6620
- RSI at 48 and 50 EMA at $0.6655 indicating neutral to cautious market sentiment.
The AUD/USD is currently trading at $0.66514, down 0.17% for the day. On the 4-hour chart, the pivot point is set at $0.6640, providing a crucial level for traders to watch. Immediate resistance is found at $0.6660, followed by higher resistance levels at $0.6675 and $0.6690.
On the downside, immediate support is located at $0.6620, with further support at $0.6606 and $0.6591.
Technical indicators show a mixed outlook. The Relative Strength Index (RSI) stands at 48, indicating neutral momentum. The 50-day Exponential Moving Average (EMA) is positioned at $0.6655, suggesting a potential support level just above the current price.
The market sentiment for AUD/USD appears cautious, with traders awaiting further economic data and market cues. The recent price movement suggests that the pair is struggling to find a clear direction.
A break above the immediate resistance of $0.6660 could signal a short-term bullish trend, while a fall below the immediate support of $0.6620 may lead to further declines.
In conclusion, traders might consider buying AUD/USD above $0.66401 with a take profit at $0.66671 and a stop loss at $0.66227.
AUD/USD - Trade Ideas
Entry Price – Buy Above 0.66401
Take Profit – 0.66671
Stop Loss – 0.66227
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$270/ -$174
Profit & Loss Per Mini Lot = +$27/ -$17
AUD/USD Price Analysis – July 02, 2024
Daily Price Outlook
Despite the risk-on market sentiment, the AUD/USD currency pair failed to gain any positive traction and remained under pressure around the 0.6643 level, hitting the intraday low of 0.6634.
The downward trend can be linked to the Reserve Bank of Australia's (RBA) Index of Commodity Prices, which fell by 4.1% year-on-year in June, following an upwardly revised 6.0% decline in the previous month. The June decline marks the mildest deflation in sixteen consecutive months.
Meanwhile, the Minutes of the Reserve Bank of Australia's (RBA) June monetary policy meeting, released Tuesday, revealed that they decided not to raise interest rates in June, believing it was better to keep them steady.
This was seen as another key factor that undermined the AUD currency and contributed to the AUD/USD pair's decline. Moreover, the bullish US dollar, backed by the advance in US Treasury yields, has also played a major role in keeping the AUD/USD pair lower.
Impact of Recent Economic Developments on the AUD/USD Pair
On the AUD front, the Reserve Bank of Australia's (RBA) Index of Commodity Prices, fell by 4.1% year-on-year in June, marking the mildest deflation in sixteen months. The RBA's June meeting minutes, released Tuesday, showed that the board decided to keep rates steady, citing a stronger case for holding than hiking.
They highlighted upside risks to inflation, with the Melbourne Institute's Monthly Inflation Gauge rising by 0.3% in June. Deputy Governor Andrew Hauser noted that policy should not be based on a single inflation report, emphasizing the need for detailed analysis of upcoming economic data.
On the data front, the Judo Bank Australia Manufacturing PMI fell to 47.2 in June from 49.7 in May, marking the fifth consecutive monthly decline and the sharpest since May 2020. This drop indicates a faster deterioration in manufacturing conditions, reflecting ongoing challenges in the sector.
Therefore, the AUD/USD pair face pressure as the RBA keeps rates steady amidst declining commodity prices and weak manufacturing PMI, while inflation risks and upcoming economic data remain pivotal for future policy decisions.
On the positive side, the potential liquidity injections by the PBOC could bolster market sentiment, benefiting the AUD/USD pair due to Australia's economic dependency on Chinese trade.
Potential Impact of Bullish US Dollar on AUDUSD Pair Amidst Fed Rate Cut Expectations
On the US front, despite positive market sentiment and expectations of a Fed rate cut in September, the dollar is strengthening as investors await clearer signals on monetary policy. However, these gains may be short-lived amid growing consensus for upcoming rate cuts.
The US ISM PMI data released Monday showed the manufacturing sector contracted for a third straight month in June, with factory input prices falling to a six-month low. The Institute for Supply Management reported its Manufacturing PMI remained in contraction for the second consecutive month at 48.5, below expectations of 48.7.
Meanwhile, the Employment Index also declined to 49.3 from May's 51.1, signaling slower hiring. Moreover, the Prices Paid Index dropped to 52.1 from 57, indicating easing inflation pressures.
These figures, alongside the PCE Price Index showing May's inflation at its lowest in over three years, reinforce expectations for potential Fed rate cuts.
Therefore, the bullish US dollar, bolstered by potential Fed rate cuts and subdued inflation pressures, is likely to exert downward pressure on the AUDUSD pair in the near term.
AUD/USD - Technical Analysis
The AUD/USD is currently trading at $0.66514, down 0.17% for the day. On the 4-hour chart, the pivot point is set at $0.6640, providing a crucial level for traders to watch. Immediate resistance is found at $0.6660, followed by higher resistance levels at $0.6675 and $0.6690.
On the downside, immediate support is located at $0.6620, with further support at $0.6606 and $0.6591.
Technical indicators show a mixed outlook. The Relative Strength Index (RSI) stands at 48, indicating neutral momentum. The 50-day Exponential Moving Average (EMA) is positioned at $0.6655, suggesting a potential support level just above the current price.
The market sentiment for AUD/USD appears cautious, with traders awaiting further economic data and market cues. The recent price movement suggests that the pair is struggling to find a clear direction.
A break above the immediate resistance of $0.6660 could signal a short-term bullish trend, while a fall below the immediate support of $0.6620 may lead to further declines.
In conclusion, traders might consider buying AUD/USD above $0.66401 with a take profit at $0.66671 and a stop loss at $0.66227.
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AUD/USD Price Analysis – June 27, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6655 level, hitting an intraday high of 0.6673. However, the reason for its upward trend can be attributed to the risk-on market sentiment, which tends to underpin risky assets like the Australian dollar, contributing to gains in the AUD/USD pair.
Meanwhile, renewed selling pressure in the US dollar was seen as another key factor that kept the AUD/USD pair higher. The US Dollar (USD) edged lower with the focus on the US core Personal Consumption Expenditure (PCE) Price Index data for May, scheduled for release on Friday.
Impact of Weakening US Dollar and Inflation Data on AUD/USD Trading Sentiment
On the US front, the broad-based US dollar lost its strength and turned bearish amid expectations of a slowdown in inflation. Investors are closely watching the US core PCE inflation data, estimated to have softened to 2.6% annually and 0.1% monthly.
Softer inflation numbers could boost hopes for early rate cuts by the Federal Reserve, while higher figures might allow the Fed to maintain current interest rates longer, supporting the US Dollar. As of now, the US Dollar Index (DXY) is near 105.90, as traders expect two rate cuts this year, potentially starting as early as September.
Therefore, the weakening US Dollar could strengthen the AUD/USD pair, as softer inflation data may increase expectations for US rate cuts, potentially benefiting the Australian Dollar against the Greenback.
Impact of Positive Global Market Sentiment on Equities and Gold Prices
Meanwhile, the global market sentiment has been showing a positive bullish trend as evidenced by the upbeat performance of the S&P 500, which hit an intraday high of 5,483.14. This was bolstered by market expectations of potential Federal Reserve rate cuts, with investors pricing in a higher likelihood of a first cut in September and possibly two cuts by year-end.
This sentiment has lifted equity markets, as lower interest rates typically support corporate earnings and economic growth, driving optimism despite lingering uncertainties in global trade and economic data. Hence, the positive sentiment was seen as a key factor that kept a AUD/USD pair higher.
Impact of Higher-than-Expected Inflation on AUD/USD and RBA Policy
On the AUD front, higher-than-expected inflation growth has raised expectations of further rate hikes by the Reserve Bank of Australia (RBA). In May, the monthly Consumer Price Index (CPI) report revealed inflation accelerating to 4.0%, driven by increased costs for fuel, food, electricity, and rentals, surpassing forecasts of 3.8% and the previous 4.0% figure.
This strong inflationary pressure suggests the RBA may lean towards tightening monetary policy to curb price increases, potentially strengthening the Australian Dollar against other currencies.
Therefore, the prospect of additional rate hikes by the RBA, fueled by higher inflation, could strengthen the AUD/USD pair as investors anticipate a more robust Australian Dollar against the US Dollar.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.66661, reflecting a 0.23% increase in the latest session. This upward movement comes amid a generally positive sentiment for the Australian dollar, supported by improved risk appetite and favorable economic indicators.
The 4-hour chart highlights a crucial pivot point at $0.6661, which serves as a key level for determining the pair's short-term direction.
The Relative Strength Index (RSI) is currently at 56, indicating a moderately bullish sentiment without reaching overbought conditions. This suggests there is room for further gains. The 50-day Exponential Moving Average (EMA) is positioned at $0.6653, providing a supportive level that reinforces the ongoing upward trend.
Immediate resistance levels are identified at $0.6690 and $0.6704, which could pose challenges to further upward movement. Conversely, immediate support is seen at $0.6640, followed by $0.6626.
Given the current technical setup, a buy limit order at $0.66541 is recommended, with a take profit target at $0.66823 and a stop loss at $0.66371.
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AUD/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- AUD/USD up 0.23%, trading at $0.66661, indicating positive market sentiment.
- Immediate resistance at $0.6690 and $0.6704, with a pivot point at $0.6661.
- RSI at 56 and 50-day EMA at $0.6653 support a bullish outlook.
The AUD/USD pair is currently trading at $0.66661, reflecting a 0.23% increase in the latest session. This upward movement comes amid a generally positive sentiment for the Australian dollar, supported by improved risk appetite and favorable economic indicators.
The 4-hour chart highlights a crucial pivot point at $0.6661, which serves as a key level for determining the pair's short-term direction.
The Relative Strength Index (RSI) is currently at 56, indicating a moderately bullish sentiment without reaching overbought conditions.
This suggests there is room for further gains. The 50-day Exponential Moving Average (EMA) is positioned at $0.6653, providing a supportive level that reinforces the ongoing upward trend.
Immediate resistance levels are identified at $0.6690 and $0.6704, which could pose challenges to further upward movement. Conversely, immediate support is seen at $0.6640, followed by $0.6626.
Given the current technical setup, a buy limit order at $0.66541 is recommended, with a take profit target at $0.66823 and a stop loss at $0.66371.
AUD/USD - Trade Ideas
Entry Price – Buy Limit 0.66541
Take Profit – 0.66823
Stop Loss – 0.66371
Risk to Reward – 1: 1.6
Profit & Loss Per Standard Lot = +$282/ -$170
Profit & Loss Per Mini Lot = +$28/ -$17