|

AUD/USD Price Forecast: A decent contention is seen around 0.6700

  • AUD/USD reversed its multi-day leg lower following a drop to 0.6700.
  • The US Dollar clinched marginal gains after US CPI surprised to the upside.
  • Australia’s Inflation Expectations eased to 4.0% in October.

Finally, some respite for the intense sell-off in AUD/USD. That said, the pair regained some balance and printed decent gains on Thursday, reversing five consecutive days of loss despite the lacklustre advance in the US Dollar (USD) and lingering scepticism surrounding China’s latest stimulus initiatives.

In fact, spot initially challenged the key support at 0.6700, an area where both the 55-day and 100-day SMAs also coincide, regaining fresh upside traction soon afterwards.

Also bolstering the renewed upbeat impulse in the Australian Dollar emerged the recovery in copper prices and iron ore prices despite persistent uncertainty surrounding the recently announced Chinese stimulus package.

On the monetary policy front, the Reserve Bank of Australia (RBA) held its cash rate steady at 4.35% during its September meeting. While the RBA acknowledged inflationary risks, Governor Michele Bullock noted that a rate hike was not a serious consideration at this time.

Earlier in the week, the release of the RBA’s meeting minutes signaled a shift towards a more dovish stance. The central bank dropped its August guidance, which had suggested that interest rates would remain stable in the near term.

However, RBA Deputy Governor Andrew Hauser later clarified that the interpretation of a dovish turn might be premature, stressing that the central bank’s efforts to combat inflation are "far from over."

Market sentiment currently reflects a 55% chance of a 25-basis point rate cut by year-end, with the RBA expected to be one of the last central banks in the G10 to cut rates, likely in response to slowing economic growth and easing inflation pressures.

Despite Federal Reserve rate cuts already being factored into the outlook, AUD/USD could extend its rebound in the latter part of the year. Yet, uncertainties around China’s economic outlook and the effectiveness of its stimulus measures continue to cloud the picture.

On the domestic calendar, Consumer Inflation Expectations rose to 4.0% in October (from 4.4%), according to the Melbourne Institute.

AUD/USD daily chart

AUD/USD short-term technical outlook

Extra losses may drive the AUD/USD to retest its October bottom of 0.6699 (October 10), ahead of the September low of 0.6622 (September 11), which is still supported by the critical 200-day SMA (0.6626).

On the plus side, the first obstacle appears at the 2024 peak of 0.6942 (September 30), which comes before the key 0.7000 milestone.

The four-hour chart shows a resurgence of the consolidative mood. Having stated that, the initial support is 0.6699, followed by 0.6622. On the upside, the 200-SMA at 0.6780 ahead of 0.6809 and the 100-SMA at 0.6828. The RSI dropped to about 35.

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to PremiumSign In

Author

Pablo Piovano

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

More from Pablo Piovano
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD rebounds after falling toward 1.1700

EUR/USD gains traction and trades above 1.1730 in the American session, looking to end the week virtually unchanged. The bullish opening in Wall Street makes it difficult for the US Dollar to preserve its recovery momentum and helps the pair rebound heading into the weekend.

GBP/USD steadies below 1.3400 as traders assess BoE policy outlook

Following Thursday's volatile session, GBP/USD moves sideways below 1.3400 on Friday. Investors reassess the Bank of England's policy oıtlook after the MPC decided to cut the interest rate by 25 bps by a slim margin. Meanwhile, the improving risk mood helps the pair hold its ground.

Gold stays below $4,350, looks to post small weekly gains

Gold struggles to gather recovery momentum and stays below $4,350 in the second half of the day on Friday, as the benchmark 10-year US Treasury bond yield edges higher. Nevertheless, the precious metal remains on track to end the week with modest gains as markets gear up for the holiday season.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid bearish market conditions

Bitcoin (BTC) is edging higher, trading above $88,000 at the time of writing on Monday. Altcoins, including Ethereum (ETH) and Ripple (XRP), are following in BTC’s footsteps, experiencing relief rebounds following a volatile week.

How much can one month of soft inflation change the Fed’s mind?

One month of softer inflation data is rarely enough to shift Federal Reserve policy on its own, but in a market highly sensitive to every data point, even a single reading can reshape expectations. November’s inflation report offered a welcome sign of cooling price pressures. 

XRP rebounds amid ETF inflows and declining retail demand demand

XRP rebounds as bulls target a short-term breakout above $2.00 on Friday. XRP ETFs record the highest inflow since December 8, signaling growing institutional appetite.