AUD/USD Outlook: RBA Keeps Rates Steady Amid Fed Rate Cut Bets
The AUD/USD pair is struggling to extend its upside above 0.6900, but its firm outlook remains intact as key factors influence the currency pair’s movement.
Australian Dollar Strength
- The Reserve Bank of Australia (RBA) is expected to maintain interest rates at current levels throughout the year, supporting the Australian Dollar.
- China’s stimulus measures to boost household spending and real estate sector are bolstering the AUD, as it serves as a proxy for China’s economic growth.
Weakening US Dollar
- Fed rate cut expectations are weighing on the US Dollar, with bets on a 50 basis points cut in November adding pressure.
- The US Dollar Index (DXY) retreats to a more than a year low, indicating downward pressure on the Greenback.
The AUD/USD pair has retraced from its yearly high near 0.6900, but the broader trend remains bullish.
Technical Analysis
- 20-day Exponential Moving Average (EMA) at 0.6770 is sloping higher, supporting the bullish trend.
- 14-day Relative Strength Index (RSI) above 60.00 indicates active bullish momentum.
If AUD/USD breaks above 0.6910, it could target 0.6936 and 0.7000 levels. On the downside, a move below 0.6738 may lead to support at 0.6700 and 0.6656.
Australian Dollar FAQs
Key Factors Influencing AUD
- Interest rates set by the RBA
- Price of major export, Iron Ore
- Health of the Chinese economy
- Inflation, growth rate, and Trade Balance of Australia
RBA Impact on AUD
- Interest rate adjustments influence AUD value
- Quantitative easing/tightening affect credit conditions
China’s Influence on AUD
- Chinese economic health impacts demand for AUD
- Growth data surprises affect AUD value
Iron Ore and Trade Balance
- Iron Ore price movement affects AUD
- Positive Trade Balance strengthens AUD
Understanding these factors can provide insights into the movements of the Australian Dollar and its impact on the AUD/USD pair.