AUD/USD Outlook: Bulls await a move beyond monthly top amid the post-FOMC USD fall
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UNLOCK OFFER- AUD/USD scales higher for the second straight day and moves closer to the monthly peak.
- The post-FOMC USD selling, along with the upbeat Australian jobs data, remains supportive.
- The fundamental backdrop favours bulls and supports prospects for a further appreciating move.
The AUD/USD pair builds on the previous day's goodish rebound from the vicinity of the 0.6500 psychological mark and gains strong follow-through positive traction for the second successive day on Thursday. The momentum lifts spot prices well within the striking distance of the monthly peak and is sponsored by a combination of factors. The post-FOMC US Dollar (USD) selling bias remains unabated, which, along with the better-than-expected Australian jobs report, lends support to the currency pair.
The Federal Reserve (Fed), as was widely anticipated, held steady on interest rates at the conclusion of its March policy meeting on Wednesday. The US central bank also upgraded its economic projection and now anticipates a stronger GDP growth of 2.1% for the year 2024 as compared to the previous estimate of 1.4%. Adding to this, the Fed raised its forecast for core inflation to 2.6% from 2.4% and saw the unemployment rate at 4% for 2024 versus 4.1% estimates in December. The US central bank, however, signalled that it remains on track to cut interest rates three times by year-end despite stick inflation. Moreover, Fed Chair Jerome Powell, during the post-meeting press conference, noted that a strong jobs market wouldn't deter the central bank from cutting rates. Powell added that inflation is moving down gradually on a somewhat bumpy road, though the recent high inflation readings kept officials on a cautious footing.
Nevertheless, the markets were quick to react and are now pricing in around 75% probability that the Fed will start its rate-cutting cycle in June. This, along with an extension of the recent bullish run in the equity markets, keeps the safe-haven USD depressed near a one-week low. The risk-sensitive Australian Dollar (AUD) gets an additional boost after the official report showed that unemployment fell to 3.7% in February from 4.1% in the prior month. Further details of the data from the Australian Bureau of Statistics (ABS) revealed that the economy added 116,500 jobs during the reported month, surpassing even the most optimistic estimates. This, in turn, reduces the odds for a rate cut by the Reserve Bank of Australia (RBA) in August to 60%, down from 80% before the data. This, in turn, favours the Aussie bulls and suggests that the path of least resistance for the AUD/USD pair remains to the upside.
Market participants now look forward to the release of flash PMI prints from Europe and the US for fresh cues about the global economic health. This might influence the broader risk sentiment, which, in turn, will drive the USD demand and provide some impetus to the AUD/USD pair. Apart from this, traders on Thursday will confront the release of the US Weekly Initial Jobless Claims and Existing Home Sales data to grab short-term opportunities.
Technical Outlook
From a technical perspective, any subsequent move up is likely to confront stiff resistance near the monthly swing high, around the 0.6665-0.6670 region. A sustained strength beyond will be seen as a fresh trigger for bullish traders and lift the AUD/USD pair to the 0.6700 mark en route to the 0.6730 supply zone.
On the flip side, dips below the 0.6600 mark now seem to find decent support near the 0.6550 support zone. A convincing break below, however, might prompt some technical selling and drag the AUD/USD pair to the 0.6500 psychological mark. The downward trajectory could extend further towards challenging the YTD low, around the 0.6445-0.6440 region touched in February.
- AUD/USD scales higher for the second straight day and moves closer to the monthly peak.
- The post-FOMC USD selling, along with the upbeat Australian jobs data, remains supportive.
- The fundamental backdrop favours bulls and supports prospects for a further appreciating move.
The AUD/USD pair builds on the previous day's goodish rebound from the vicinity of the 0.6500 psychological mark and gains strong follow-through positive traction for the second successive day on Thursday. The momentum lifts spot prices well within the striking distance of the monthly peak and is sponsored by a combination of factors. The post-FOMC US Dollar (USD) selling bias remains unabated, which, along with the better-than-expected Australian jobs report, lends support to the currency pair.
The Federal Reserve (Fed), as was widely anticipated, held steady on interest rates at the conclusion of its March policy meeting on Wednesday. The US central bank also upgraded its economic projection and now anticipates a stronger GDP growth of 2.1% for the year 2024 as compared to the previous estimate of 1.4%. Adding to this, the Fed raised its forecast for core inflation to 2.6% from 2.4% and saw the unemployment rate at 4% for 2024 versus 4.1% estimates in December. The US central bank, however, signalled that it remains on track to cut interest rates three times by year-end despite stick inflation. Moreover, Fed Chair Jerome Powell, during the post-meeting press conference, noted that a strong jobs market wouldn't deter the central bank from cutting rates. Powell added that inflation is moving down gradually on a somewhat bumpy road, though the recent high inflation readings kept officials on a cautious footing.
Nevertheless, the markets were quick to react and are now pricing in around 75% probability that the Fed will start its rate-cutting cycle in June. This, along with an extension of the recent bullish run in the equity markets, keeps the safe-haven USD depressed near a one-week low. The risk-sensitive Australian Dollar (AUD) gets an additional boost after the official report showed that unemployment fell to 3.7% in February from 4.1% in the prior month. Further details of the data from the Australian Bureau of Statistics (ABS) revealed that the economy added 116,500 jobs during the reported month, surpassing even the most optimistic estimates. This, in turn, reduces the odds for a rate cut by the Reserve Bank of Australia (RBA) in August to 60%, down from 80% before the data. This, in turn, favours the Aussie bulls and suggests that the path of least resistance for the AUD/USD pair remains to the upside.
Market participants now look forward to the release of flash PMI prints from Europe and the US for fresh cues about the global economic health. This might influence the broader risk sentiment, which, in turn, will drive the USD demand and provide some impetus to the AUD/USD pair. Apart from this, traders on Thursday will confront the release of the US Weekly Initial Jobless Claims and Existing Home Sales data to grab short-term opportunities.
Technical Outlook
From a technical perspective, any subsequent move up is likely to confront stiff resistance near the monthly swing high, around the 0.6665-0.6670 region. A sustained strength beyond will be seen as a fresh trigger for bullish traders and lift the AUD/USD pair to the 0.6700 mark en route to the 0.6730 supply zone.
On the flip side, dips below the 0.6600 mark now seem to find decent support near the 0.6550 support zone. A convincing break below, however, might prompt some technical selling and drag the AUD/USD pair to the 0.6500 psychological mark. The downward trajectory could extend further towards challenging the YTD low, around the 0.6445-0.6440 region touched in February.
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