The Ups and Downs of AUD/USD
Recent Developments
On Wednesday, the US dollar’s late rebound caused risk-associated assets to lose initial gains, leading to a retreat in AUD/USD from recent highs above the 0.6900 level. This region has not been seen since late February 2023. The Aussie Dollar had risen in the past few sessions due to news of additional stimulus by the PBoC.
Factors at Play
- The Greenback found support near yearly lows around 100.20 and made a comeback to the 100.80 zone as per the US Dollar Index (DXY).
- Copper and iron ore prices also saw a recovery, backed by expectations of Chinese stimulus.
- The RBA kept rates steady at 4.35% during its September 24 meeting, with Governor Michele Bullock indicating a cautious stance on inflation targets.
Future Outlook
Despite the Fed’s expected rate cuts and the RBA’s likelihood of maintaining a restrictive stance, AUD/USD could see further improvements later in the year. However, uncertainties remain regarding the Chinese economy and the actualization of stimulus measures.
RBA’s Monthly CPI Indicator
The RBA’s recent CPI data for August showed a decrease to 2.7% from 3.5%, with Governor Bullock highlighting the volatility of the data. The RBA does not anticipate inflation to return to the target range of 2-3% sustainably until 2026.
AUD/USD Short-Term Technical Analysis
According to the daily chart, further increases could push AUD/USD towards the 2024 high of 0.6908 before potentially reaching the key 0.7000 level. Sellers might target the September low of 0.6622, supported by the 200-day SMA, and the 2024 bottom of 0.6347.
In the four-hour chart, there is a slight loss of positive momentum. Resistance levels include 0.6908, 0.6920, and 0.7024, while support levels are at 0.6789, 0.6746, and 0.6692. The RSI hovers around 50.
Analysis Breakdown
The AUD/USD pair’s movement is influenced by various factors, including the US dollar’s performance, commodity prices, central bank policies, and economic data. The recent RBA meeting and CPI data offer insights into Australia’s economic health and monetary policy direction.
For investors, understanding these developments can help in making informed decisions regarding currency trading, investment strategies, and risk management. Keeping an eye on key levels and technical indicators can aid in identifying potential entry and exit points in the market.