The Australian Dollar (AUD) Gains Momentum Against the US Dollar (USD)
The AUD/USD pair reversed part of its recent weakness and is showing signs of regaining strength, hovering around the crucial 0.6700 level. Despite the US Dollar maintaining a positive trend on Thursday, the Australian Dollar managed to bounce back from recent lows near 0.6650.
Factors Driving the AUD/USD Movement
- The US Dollar’s strength
- Concerns over China’s stimulus measures
- Fluctuations in copper and iron ore prices
Despite these challenges, the Australian Dollar’s resurgence was supported by positive data from Australia’s labor market report. The Unemployment Rate remained stable at 4.1%, and there was an increase of 64.1K individuals in Employment Change.
Monetary Policy and Market Sentiment
The Reserve Bank of Australia (RBA) maintained its cash rate at 4.35% and signaled a cautious approach towards rate hikes, citing inflationary risks. The market sentiment suggests a 50% probability of a rate cut by the end of the year, making the RBA one of the last G10 central banks to lower rates.
Despite the potential impact of Federal Reserve rate cuts on the AUD/USD pair, uncertainties surrounding China’s economic outlook and stimulus measures pose significant challenges.
Technical Analysis of AUD/USD
On the downside, the AUD/USD pair could test support levels at 0.6657 and 0.6622, with the 200-day SMA providing key support. On the upside, resistance levels are at 0.6758, 0.6769 (200-SMA), and 0.6796 (100-SMA). The RSI indicator suggests a potential rebound in the near term.
Upcoming Events
Investors should keep an eye on the release of advanced Judo Bank Manufacturing and Services PMIs in Australia next week, which could impact the AUD/USD pair’s movement.
Conclusion
The AUD/USD pair’s recent rebound showcases the resilience of the Australian Dollar despite challenges from the US Dollar’s strength and uncertainties surrounding China’s stimulus measures. Positive data from Australia’s labor market report and the RBA’s cautious approach to monetary policy have provided support to the AUD.
Investors should closely monitor upcoming events, such as the release of PMI data, to gauge the future direction of the AUD/USD pair. Technical analysis suggests potential support and resistance levels for traders to consider in their decision-making process.