AUD/USD Forecast: Further consolidation in the pipeline

AUD/USD resumes the upside despite dollar gains.
The pair so far maintains a rangebound theme around 0.6600.
Investors’ attention should now shift to the release of inflation figures.

Pablo Piovano FXStreet

The bullish bias appears to be back in action, sponsoring a decent advance in AUD/USD to the 0.6600 neighbourhood once again on Thursday. Looking at the broader picture, it seems the pair remains trapped within a multi-session range around the 0.660 zone.

The improvement in the Aussie dollar came despite marked gains in the greenback, while recent news citing further stimulus by the PBoC and the positive session in copper prices and iron underpinned the daily gains in the Aussie dollar.

The Chinese factor, in combination with the projected decision by the Reserve Bank of Australia (RBA) to maintain its current policy stance at its meeting in February, is still seen as limiting the upside potential of the pair in the next few weeks, allowing for extra retracements in the short-term horizon. On the same side of the coin emerges the likelihood that the Federal Reserve could continue to delay expectations of an interest rate reduction in the coming months, a scenario that should prop up extra gains in the greenback.

Back to the RBA, the decline in inflation metrics observed in December, along with the continued moderation of the labour market (albeit still relatively tight), seems to have solidified the consensus among market participants that the central bank would keep its rates on hold at its February event.

AUD/USD daily chart

AUD/USD short-term technical outlook

If the AUD/USD recovery becomes more serious, the pair may face the provisional 55-day SMA at 0.6630 prior to the December 2023 peak of 0.6871 (December 28), which is preceded by the July 2023 high of 0.6894 (July 14) and the June 2023 top of 0.6899 (June 16), all of which occur before the critical 0.7000 level.

Further consolidation seems the name of the game for the pair when it comes to the 4-hour chart. On the upside, the 100-SMA is presently at 0.6646, followed by the 200-SMA at 0.6682. The breakout of this sector indicates a possible move to peaks near 0.6730. On the downside, there is initial contention around 0.6525. If this zone is breached, no substantial disagreement occurs until 0.6452. The MACD flirts with the positive boundary, while the RSI remains around 52.

View Live Chart for the AUD/USD

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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