As the world’s best investment manager and financial market journalist, I bring you the latest update on the AUD/USD pair. The Aussie asset has dropped from the monthly high of 0.6800 in Monday’s American session, as the US Dollar (USD) gains strength. The near-term outlook for the US Dollar remains weak, with the Federal Reserve (Fed) expected to start reducing interest rates from the September meeting.
The US Dollar Index (DXY) has risen slightly to around 100.90 from the annual low of 100.53, indicating a potential shift in market sentiment. Traders are divided over the size of the expected interest rate cut in September, with some betting on a 50-basis point reduction and others favoring a 25-bps rate cut.
On the other hand, the Australian Dollar (AUD) is set to be influenced by the upcoming release of the monthly Consumer Price Index (CPI) data for July. Economists predict a decline in price pressures to 3.4% from 3.8% in June, which could lead to expectations of interest rate cuts.
From a technical perspective, AUD/USD is trading near the monthly high of 0.6800, with a strong bullish momentum indicated by the 10-day Moving Average (EMA) and the 14-period Relative Strength Index (RSI). A move above the resistance level of 0.6800 could push the asset higher towards 0.6840 and potentially to the high of 0.6870.
However, a downside move below the support levels of 0.6660, 0.6620, and 0.6585 could expose the asset to further downside risks.
AUD/USD Daily Chart:
Australian Dollar FAQs:
- Interest rates set by the Reserve Bank of Australia (RBA) play a crucial role in influencing the Australian Dollar.
- The health of the Chinese economy, price of Iron Ore, inflation rate, growth rate, and Trade Balance are key drivers of the AUD.
- Positive or negative surprises in Chinese growth data directly impact the Australian Dollar.
- The price of Iron Ore, Australia’s largest export, can drive the value of the AUD.
- The Trade Balance, reflecting the difference between exports and imports, also influences the AUD.
Analysis:
In conclusion, the current market dynamics suggest a potential shift in the AUD/USD pair as the Fed prepares for interest rate cuts and Aussie inflation data looms. Traders should closely monitor key levels and economic indicators to capitalize on potential opportunities in the forex market. Understanding the factors driving the Australian Dollar is essential for making informed investment decisions and managing risks effectively.