- The US Dollar stages a recovery on Monday after plunging to seven-month lows against a basket of currencies.
- Australia’s inflation data might spur a reaction by the Reserve Bank of Australia as prices continue to elevate.
- AUD/USD Price Analysis: In a pullback, though expected to resume its uptrend, above 0.7000.
The Australian Dollar (AUD) losses momentum against the US Dollar (USD) and tumbles back below the 0.7000 figure, on low liquidity conditions, on the observance of Martin Luther King Jr. day. A risk-off impulse bolstered the US Dollar (USD), recovering some ground against most G8 currencies. Therefore, the AUD/USD is trading at 0.6952.
Although the US equities cash market is closed, the S&P 500 and Nasdaq Futures portray a dampened market sentiment. Last week’s US economic data, mainly inflation edging lower and consumer sentiment improved, as reported by the University of Michigan (UoM) poll, augmented speculations that the US Federal Reserve would tighten policy by 25 bps. Also, inflation expectations continue to drop as Americans remain optimistic that the US Central Bank could achieve a “soft landing.”
The US Dollar Index (DXY), which measures the greenback’s value against a basket of six currencies, edges up by almost 0.70%, at 128.730, despite the absence of US traders, a headwind for the AUD/USD.
On the Australian front, its economic calendar featured the Melbourne Institute Monthly Inflation gauge, which showed that inflation decelerated by 0.2%. The latest data showed signs that Australia’s inflation figures remained high, both in terms of quarterly and monthly readings. The annual inflation rate in Australia climbed to an over three-decade high of 7.3% in Q3 of 2022 from 6.1% in Q2. Meanwhile, monthly data showed Australia’s CPI rose to a record high of 7.3% YoY in November, well above the Reserve Bank of Australia’s (RBA) 2% to 3% target, fueling expectations for additional tightening by the RBA.
AUD/USD Price Analysis: Technical outlook
After rallying for three consecutive days to fresh multi-month highs at 0.7019, the AUD/USD it’s retracing to the mid-0.69-0.70 range. Although at bullish territory, the Relative Strength Index (RSI) aims down, contrarily to the Rate of Change (RoC), which shows volatility is increasing. Hence, the AUD/USD traders might refrain from opening fresh long positions until the RSI shifts upwards, though the path of least resistance is upwards.
Hence, the AUD/USD key resistance levels would be 0.7000, the new 7-month high hit on January’s 16 sessions at 0.7019, and the August 11 daily high of 0.7136.
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 daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.