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AUD/USD ends week lower, pressured by RBA’s stance and Powell’s hawkish posture

  • AUD/USD declined 0.12% for the day, marking a significant weekly drop from 0.6522 to 0.6338.
  • The RBA's 25 bps rate hike under new Governor Michele Bullock's leadership fails to provide a bullish impetus for the Aussie.
  • Jerome Powell's hawkish tone on US monetary policy adds to the AUD's woes, with China's economic slowdown posing additional risks.

The AUD/USD dropped 0.12% daily and extended its substantial losses during the week, which has witnessed the pair traveling from a weekly high of 0.6522 toward a low of 0.6338. At the time of writing, the pair trades at 0.6358.

Australian Dollar struggles as RBA rate hike fails to inspire, while Fed Chair's remarks bolster the US Dollar

Some reasons behind the AUD/USD price action are linked to central banks, with the Reserve Bank of Australia (RBA) hiking rates 25 bps from 4.10% to 4.35%. However, it failed to deliver a hawkish stance, which was the first monetary policy decision headed by Governor Michele Bullock. On Tuesday, that sent the pair into a tailspin, plunging more than 50 pips or 0.81%.

Despite that, dovish remarks by several Federal Reserve members kept the AUD/USD afloat until Thursday, when Fed Chair Jerome Powell was more hawkish than expected. He commented that US central bank policymakers are unsure whether the current monetary policy stance is sufficiently restrictive, emphasizing that they would raise rates if needed. In his speech, he acknowledged that inflation is slowing down but remains above the 2% target.

Given the backdrop, the AUD/USD failed to extend last week's uptrend, hampered by fundamentals and market sentiment. In addition to that, a deflationary scenario in China, hurts the prospects of the Aussie (AUD), due to Australia’s dependence on its largest trading partner. A further deterioration of China’s economy would dampen Australia’s prospects, suggesting that further AUD/USD weakness lies ahead.

The following week, the Aussie’s economic docket would feature NAB Consumer Confidence and jobs data. On the US side, inflation data, unemployment claims, and Fed speaking would provide some clues regarding the US economy's status.

AUD/USD Price Analysis: Technical outlook

AUD/USD price action portrays the pair reversing most of its losses during November, with bears remaining in charge. An initial ‘evening star’ chart pattern opened the door for consolidation, but a drop below the November 7 low of 0.6403 exacerbated the plunge below the 0.6350 mark.

The formation of an ongoing hammer could pave the way to consolidate the AUD/USD at around current exchange rates, but if sellers push prices below 0.6300, that could pave the way to test the year-to-date (YTD) low of 0.6270.  On the other hand, if buyers lift the AUD/USD past the 50-day moving average (DMA) at 0.6387, that could open the door to reclaim 0.6400, ahead of retesting 0.6500.

AUD/USD

Overview
Today last price0.6355
Today Daily Change-0.0012
Today Daily Change %-0.19
Today daily open0.6367
 
Trends
Daily SMA200.6369
Daily SMA500.639
Daily SMA1000.65
Daily SMA2000.6608
 
Levels
Previous Daily High0.6428
Previous Daily Low0.6364
Previous Weekly High0.6518
Previous Weekly Low0.6315
Previous Monthly High0.6445
Previous Monthly Low0.627
Daily Fibonacci 38.2%0.6388
Daily Fibonacci 61.8%0.6404
Daily Pivot Point S10.6344
Daily Pivot Point S20.6322
Daily Pivot Point S30.628
Daily Pivot Point R10.6409
Daily Pivot Point R20.6451
Daily Pivot Point R30.6473

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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