- AUD/USD extended its optimism beyond 0.6500.
- The selling pressure in the Dollar helped the pair.
- Further gains look likely above the 200-day SMA.
Thursday saw renewed selling interest in the US Dollar (USD), motivating AUD/USD to keep its weekly uptrend well in place and briefly surpassing the critical 200-day SMA around 0.6530.
Regarding the Greenback, sellers appeared back in the market after US Q1 GDP figures came in short of expectations and quarterly inflation prints ticked higher, reigniting speculation that the Federal Reserve (Fed) might keep its restrictive stance for longer.
Meanwhile, the daily advance in the Australian dollar was accompanied by further improvement in the risk complex as well as by the positive performance of copper and iron ore prices.
Regarding monetary policy, investors kept projecting a rate cut by the Reserve Bank of Australia (RBA) at some point in the latter part of the year, particularly after inflation figures published earlier in the week surprised to the upside. On this, market sentiment now implies a 90% likelihood of a 25 bps rate cut in 2024, compared to the approximately 50 bps of easing earlier this month.
Meanwhile, both the RBA and the Fed are expected to start their easing cycles later than the majority of their G10 peers.
With the Fed's resolute stance on tightening monetary policies and the potential for the RBA to commence an easing cycle later this year, the likelihood of sustained gains in AUD/USD is seen as limited for the time being.
Additionally, recent Chinese economic data hasn't strongly signalled a lasting recovery, which is necessary to underpin a significant rebound in the Australian dollar.
AUD/USD daily chart
AUD/USD short-term technical outlook
A further advance may see AUD/USD revisit the weekly top of 0.6538 (April 25), which appears bolstered by the key 200-day SMA of 0.6526. The trespass of this zone could open the door to a test of the April peak of 0.6644, followed by the March high of 0.6667 (March 8) and the December 2023 top of 0.6871. Further north, the July 2023 peak of 0.6894 (July 14) emerges ahead of the June 2023 peak of 0.6899 (June 16) and the critical 0.7000 level.
Meanwhile, if sellers seize control and the AUD/USD falls below its 2024 low of 0.6362 (April 19), spot might revert to its 2023 bottom of 0.6270 (October 26) before reaching the round milestone of 0.6200.
Looking at the larger picture, a sustained break above the crucial 200-day SMA would likely result in more gains.
On the 4-hour chart, the pair seems to have met some resistance around 0.6540-0.6530 band. However, the initial support level is the 55-SMA at 0.6451 prior to 0.6362, and 0.6338. On the upside, immediate barrier lines up at 0.6538 before 0.6552. In addition, the RSI rebounded past 60.
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.