AUD/USD Current Price: 0.6508
- RBA Governor Lowe will appear before the Senate Economic Committee on Wednesday.
- Australia will release inflation data on Wednesday before the June 6 RBA meeting.
- The AUD/USD pair is moving between 0.6500 and 0.6540.
The AUD/USD pair dropped on Tuesday, erasing two days of gains after being unable to break above 0.6550. It is now back in the 0.6500 area. A stronger US dollar and a deterioration in market sentiment weighed on the pair. Key events ahead will likely decide the next direction.
The Australian economic calendar has several key events scheduled for Wednesday. The first event will be the appearance of Reserve Bank of Australia (RBA) Governor Philip Lowe, testifying before the Senate Economics Legislation Committee in Canberra. He will be asked about the latest interest rate hike, the economic outlook, and what lies ahead. This becomes more relevant, considering that next week will be the monetary policy meeting.
Later on Wednesday, Australia will release the May monthly Consumer Price Index (CPI), expected to show a modest increase from the 6.3% of the previous. These numbers will be critical for monetary policy expectations. However, boosting expectations for a rate hike would be a significant positive surprise. As of now, markets expect a pause in June. Also, on Wednesday, Private Sector Credit data is due.
The US dollar posted mixed results on Tuesday, rising against most emerging market and commodity currencies. A negative market sentiment weighed on these currencies. Key US employment data is due later in the week, which could impact the Greenback. Additionally, the debt ceiling deal announced during the weekend is yet to be passed by the Republican-controlled House and the Democratic Senate in time for the June 5 deadline. This uncertainty could also contribute to the sour market mood.
What Lowe says and the inflation number will likely define the direction of the AUD/USD during the Asian session. However, market sentiment is also playing an important role. A recovery in equity markets could boost the Aussie, while the opposite could make it difficult for AUD/USD to hold above 0.6500.
AUD/USD short-term technical outlook
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The recovery of the AUD/USD pair has found resistance below 0.6550 and has since pulled back to the 0.6500 area. The pair moves within a range between these levels, with a dominant bearish trend. Risks are tilted to the downside, in line with the primary trend. The next medium-term support is located at 0.6400/10.
On the 4-hour chart, technical indicators offer mixed signals, with Momentum moving to the upside and the Relative Strength Index (RSI) struggling below midlines. The price is below the 20-period Simple Moving Average (SMA). A break above 0.6550 should open the doors to recovery with more conviction. On the contrary, a firm break below 0.6500 could prompt more volatility and a bearish acceleration. The following support stands at 0.6440.
Support levels: 0.6495 0.6445 0.6415
Resistance levels: 0.6550 0.6580 0.6610
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