AUD/USD Bearish Trend Continues as US Dollar Strengthens: Market Analysis
The AUD/USD pair continued its downward trend on Thursday as the US Dollar gained momentum, impacting the pair’s value. The Australian labor market report also contributed to the mixed sentiment surrounding the pair.
The recent strength of the US Dollar has pushed the AUD/USD pair lower, with the Greenback benefiting from higher US yields and speculation of a potential interest rate cut by the Federal Reserve in September. Federal Reserve Chair Jerome Powell’s comments earlier in the week further fueled expectations of rate cuts, as he hinted at the possibility of reducing rates sooner than previously anticipated.
Chicago Federal Reserve Bank President Austan Goolsbee’s remarks also added to the speculation, suggesting that the US economy may be approaching a time for interest rate cuts to support inflation targets. Additionally, declining copper and iron ore prices have negatively impacted the Australian dollar.
Despite the US Federal Reserve’s potential easing measures, the Reserve Bank of Australia (RBA) is expected to maintain a more restrictive stance on interest rates compared to other central banks. The RBA’s recent meeting indicated a cautious approach, with officials considering a rate hike to control inflation but ultimately opting against it due to concerns about the labor market.
In the short term, the AUD/USD pair may find support at the 55-day SMA around 0.6661, with further downside potentially targeting the June low of 0.6574 and the 200-day SMA at 0.6578. On the upside, resistance levels include the July high of 0.6798 and the December 2023 top of 0.6871.
Overall, the AUD/USD pair’s trend is likely to continue as long as it trades above the 200-day SMA. The 4-hour chart shows a consolidative pattern, with support levels at 0.6714 and resistance at 0.6748 and 0.6754.
In conclusion, the AUD/USD pair is influenced by various factors such as US Dollar strength, potential Fed easing, and Chinese economic conditions. Investors should monitor these developments closely to make informed decisions about their investments in the currency pair.