Mario Blascak, PhD
Independent Analyst
- The AUD/USD was rejected at 0.7200 as it trades above the upward sloping trendline.
- The prospects of a solid Australian labor market in November underpin Aussie.
- The US Federal Reserve is expected to raise the target range for Fed funds to 2.25%-2.50% with the monetary policy outlook is in the focus.
- Fresh US dollar selling and the rebound in copper prices failed to support the upside momentum on Aussie.
The AUD/USD is trading little changed at around 0.7180 after failing to break above 0.7200 before the Federal Reserve is expected to deliver a dovish rate hike later on Wednesday. The main driver for the currency pair stems from the outlook for the US monetary policy from the Federal Reserve.
The Australian labor market is expected to remain solid in creating 20.0K new jobs in November with the unemployment rate stuck to 5.0% early on Thursday.
The markets focused on the outlook for Fed policy in 2019 with policymakers possibly signaling the pause to its rate hiking cycle while delivering broadly expected rate hike in December.
The market participants expect the Fed to repeatedly underline the conditionality and data dependency for the future policy move.
Technically the AUD/USD is supported by a trendline connecting the cyclical low on AUD/USD at 0.7020 and last Friday’s low of 0.7150. The technical oscillators are mixed with Momentum pointing downwards while the Relative Strength Index is still pointing upwards in neutral territory. The Slow Stochastics made a bullish crossover in the oversold territory on a daily chart. The AUD/USD is poised to benefit from a solid labor market report and dovish Fed outlook for monetary policy. The rebound in copper prices also supports the commodity currency like Aussie. The currency pair should remain supported by the trendline support heading higher towards 0.7280 representing the immediate target and a 23.6% Fibonacci retracement of a fall from 2018 high of 0.8100 to 0.7020 cyclical low.
AUD/USD daily chart
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
EUR/USD hovers around 1.0700 ahead of German IFO survey
EUR/USD is consolidating recovery gains at around 1.0700 in the European morning on Wednesday. The pair stays afloat amid strong Eurozone business activity data against cooling US manufacturing and services sectors. Germany's IFO survey is next in focus.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold price flat lines above $2,300 mark, looks to US macro data for fresh impetus
Gold price (XAU/USD) struggles to capitalize on the previous day's bounce from over a two-week low – levels just below the $2,300 mark – and oscillates in a narrow range heading into the European session on Wednesday.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin (WLD) price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.