- AUD/USD rebounded further from Friday’s YTD lows.
- The better tone in the risk complex helped AUD.
- Investors’ attention shifts to the release of inflation data.
The selling pressure in the Australian Dollar (AUD) lost traction on Monday and sponsored a decent rebound in AUD/USD to the 0.6450-0.6455 band after two daily pullbacks in a row.
The pair’s positive price action came despite modest buying pressure on the US Dollar (USD), as investors kept unchanged a potential delay in interest rate hikes by the Federal Reserve (Fed), potentially to the September meeting.
Meanwhile, daily gains in the Aussie dollar came amidst a broad-based, improved appetite for risk-linked assets in response to diminishing geopolitical fears. Also accompanying the uptick in spot emerged a decent bounce in iron ore prices and a humble decline in copper prices, despite hitting fresh tops near $850.00 for the first time since March 2022.
In terms of monetary policy, the Reserve Bank of Australia (RBA) reiterated its commitment to maintaining current policies in the Minutes of its March meeting. Market sentiment currently suggests a 90% chance of a 25 bps rate cut in 2024, compared to the approximately 50 bps of easing observed earlier this month.
It's worth noting that both the RBA and the Fed are among the final G10 central banks expected to consider interest rate adjustments this year.
With the Fed maintaining a firm stance on tightening monetary policies and the possibility of the RBA beginning an easing cycle later in the year, AUD/USD is likely to face sustained downward pressure in the short and medium terms.
Moreover, recent Chinese economic data has not provided strong indications of a lasting recovery, which is necessary to support a significant rebound in the Australian dollar.
AUD/USD daily chart
AUD/USD short-term technical outlook
If sellers maintain control and the AUD/USD goes below its 2024 low of 0.6362 (April 19), spot may retest its 2023 bottom of 0.6270 (October 26) before reaching the round milestone of 0.6200.
On the other hand, there is an immediate block at the critical 200-day SMA of 0.6530, which comes before the April high of 0.6644, followed by the March top of 0.6667 (March 8) and the December 2023 peak of 0.6871. Further north, the July high of 0.6894 (July 14) is slightly ahead of the June top of 0.6899 (June 16) and the critical 0.7000 level.
Looking at the broader picture, the pair is projected to continue its downward trend while remaining below the important 200-day SMA.
On the 4-hour chart, the pair extends its rebound from recent yearly lows. Nonetheless, the initial support is 0.6362, followed by 0.6338. On the upside, 0.6456 offers immediate resistance before 0.6493. Furthermore, the RSI revisited the 50 region.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.