AUD/USD Sees Rebound Amidst US Dollar Weakness
- AUD/USD regained strength after hitting lows near 0.6530.
- US Dollar weakness led to a recovery in risky assets.
- Australian inflation figures showed a loss of momentum.
After experiencing three consecutive daily declines, AUD/USD saw a significant upward movement on Wednesday, reaching levels close to 0.6600.
Factors Driving AUD/USD Movement
The rebound in AUD/USD has shifted focus towards the critical 200-day simple moving average (SMA) at 0.6627, signaling a potential change in the pair’s outlook to a more positive one.
The recovery in the Australian Dollar came as a result of weakness in the US Dollar, which also contributed to the rise in other risk-sensitive assets.
Despite doubts surrounding China’s stimulus measures, AUD managed to bounce back, indicating resilience in the face of market uncertainties.
RBA Policy and Economic Outlook
The Reserve Bank of Australia (RBA) kept its cash rate steady at 4.35% in September, citing inflation risks but downplaying the likelihood of an immediate rate hike.
Market sentiment suggests a 50% chance of a rate cut by year-end, although Deputy Governor Andrew Hauser cautioned against expecting significant rate cuts, given the current neutral rate range.
Impact of Global Economic Factors
Potential rate cuts by the Federal Reserve could support AUD/USD, but ongoing uncertainty surrounding China’s economic trajectory may continue to exert downward pressure on the pair.
Recent data from Australia showed a slight decrease in inflation indicators, but disinflationary pressures may not be strong enough to prompt the RBA to initiate an easing cycle at this point.
AUD/USD Short-Term Technical Analysis
In the short term, AUD/USD could face further losses towards the October low of 0.6536 and the 2024 bottom of 0.6347.
On the upside, intermediate resistance levels include the 200-day SMA at 0.6627, followed by the 100-day and 55-day SMAs at 0.6693 and 0.6738, respectively.
The four-hour chart indicates a mild reversal in the negative trend, with initial support at 0.6536 and resistance levels at 0.6635, 0.6672, and 0.6723.
Conclusion
The rebound in AUD/USD reflects a combination of factors, including US Dollar weakness, RBA policy decisions, and global economic uncertainties. While short-term technical analysis points to potential resistance and support levels, the overall outlook for the pair remains subject to ongoing market developments and economic data.