- In April, the AUD/USD is recording losses of 5.11%
- The US economy shrank in Q1, though it won’t stop the Fed from hiking rates.
- AUD/USD Price Forecast: A daily close under 0.7100 could send the pair tumbling towards 0.7000.
AUD/USD is losing some ground after on Wednesday, AUD/USD bears took a breather before pushing the pair beyond the 0.7100 mark, reaching a fresh two-month low around 0.7055, though late as the Wall Street close looms, the Aussie is back above the 0.7100 mark. At the time of writing, the AUD/USD is trading at 0.7100.
Sentiment improves, US economy contracts, but the USD stays resilient and rose
Global equities rallied for a second straight trading session amidst a positive market sentiment. China’s coronavirus outbreak seems to give a respite to investors, while the Ukraine-Russia conflict continues to escalate on Russia’s desire for victory. Aside from the macro environment, the US Gross Domestic Product for the first quarter showed that the US economy shrank 1.4% on an annualized pace, the first in nearly two years, though it’s unlikely to stop the Federal Reserve from hiking interest rates of 0.50 bps, as it attempts to tame inflation.
Stagflation talks began once the report hit the wires. Analysts of ING wrote in a note that domestic demand held up firmly when considering the hit to the economy momentum caused by the Omicron variant last year. Furthermore, they added that “consumer spending grew 2.7%, while non-residential investment expanded 9.2% and residential investment posted a 2.1% gain.” They attributed the negative figure to the drop in exports and imports surplus.
At the same time, the US Department of Labour released the Initial Jobless Claims for the week ending on April 22, which rose by 180K, lower than the 182K estimated.
The week ahead, the Australian economic docket will feature the Producer Price Index (PPI) for the first quarter, which is expected to rise by 1.6%. On a yearly basis is estimated to increase by 4%. On the US docket, the Fed’s favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE), is estimated to downtick to 5.3%, while the headline is estimated to rose near the 7% threshold.
AUD/USD Price Forecast: Technical outlook
The AUD/USD remains downward biased, as illustrated by its daily chart. Both MACD lines are heading south while its histogram is expanding to the downside, even though the AUD/USD jumped off monthly lows around 0.7050, shy of February’s 4 cycle lows around 0.7051.
The AUD/USD 1-hour chart depicts the pair is consolidating near the 0.7100 figure. The last three days’ AUD/USD price action formed a falling wedge, briefly broken downwards, though the major recovered and reclaimed the bottom-trendline. However, the hourly simple moving averages (SMAs) above the spot price could keep the pair downward pressured.
That said, the AUD/USD first support would be 0.7100. Break below would expose the confluence of February’s four daily low and the S2 daily pivot at 0.7051, followed by February’s 1 daily low at 0.7033, followed by the S3 daily pivot at the triple-zero figure at 0.7000.
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
AUD/USD posts gain, yet dive below 0.6500 amid Aussie CPI, ahead of US GDP
The Aussie Dollar finished Wednesday’s session with decent gains of 0.15% against the US Dollar, yet it retreated from weekly highs of 0.6529, which it hit after a hotter-than-expected inflation report. As the Asian session begins, the AUD/USD trades around 0.6495.
USD/JPY finds its highest bids since 1990, approaches 156.00
USD/JPY broke into its highest chart territory since June of 1990 on Wednesday, peaking near 155.40 for the first time in 34 years as the Japanese Yen continues to tumble across the broad FX market.
Gold stays firm amid higher US yields as traders await US GDP data
Gold recovers from recent losses, buoyed by market interest despite a stronger US Dollar and higher US Treasury yields. De-escalation of Middle East tensions contributed to increased market stability, denting the appetite for Gold buying.
Ethereum suffers slight pullback, Hong Kong spot ETH ETFs to begin trading on April 30
Ethereum suffered a brief decline on Wednesday afternoon despite increased accumulation from whales. This follows Ethereum restaking protocol Renzo restaked ETH crashing from its 1:1 peg with ETH and increased activities surrounding spot Ethereum ETFs.
Dow Jones Industrial Average hesitates on Wednesday as markets wait for key US data
The DJIA stumbled on Wednesday, falling from recent highs near 38,550.00 as investors ease off of Tuesday’s risk appetite. The index recovered as US data continues to vex financial markets that remain overwhelmingly focused on rate cuts from the US Fed.