CFD Trading Rate Australian Dollar vs US Dollar (AUDUSD)

• AUD/USD is buoyed by an improved risk sentiment and a sluggish US economic calendar.
• Wall Street opens higher, influencing currencies despite a slight increase in the US Dollar Index.
• Upcoming Australian employment data could impact AUD strength, with forecasts suggesting modest job growth.

The Australian Dollar makes a U-turn and rises against the US Dollar in early trading during the North American session, gaining 0.33% amid an improvement in risk appetite. A scarce economic calendar in the United States (US) and hawkish comments from Federal Reserve Chair Jerome Powell failed to boost the Greenback. The AUD/USD trades at 0.6423.

AUD/USD gains despite hawkish Fed comments; focus on Australian jobs data

Wall Street is setting the tone, opening with gains. US Treasury yields tumble but do not undermine the buck, which stays firm, as depicted by the US Dollar Index (DXY). The DXY is up 0.11%, at 106.24.

US data revealed during the week showed that American consumers remain resilient while Industrial Production stands tall. On the negative front, US Building Permits and Housing Starts plunged due to higher mortgage rates. The Mortgage Bankers Association (MBA) revealed that rates for 30-year mortgages edged up from 7.01% to 7.13%.

In addition to the data, Fed Chair Jerome Powell said that the lack of progress on inflation would likely require keeping rates steady for “as long as needed.” The markets perceived Powell as hawkish, though Wednesday’s price action suggests the opposite.

In December 2023, the Fed revealed in its projections that most officials expected to cut rates three times due to the evolution of the disinflation process. Nevertheless, three months of higher inflation than expected via the Consumer Price Index (CPI) sparked Powell’s tilt and a repricing of fewer rate cuts than foreseen.

On the Australian front, it would feature the release of jobs data. The Employment Change is expected to add 7.2K jobs to the workforce, well below the 116.5K created in February, while the Unemployment Rate is foreseen to edge close to 4%. If the data comes weak, that would warrant a more accommodative policy by the Reserve Bank of Australia. Hence, AUD/USD traders could push the pair lower.

AUD/USD Price Analysis: Technical outlook

Despite recovering, the AUD/USD is bearishly biased, and it would require buyers to achieve a daily close above the February 13 low of 0.6442. Otherwise, the pair's first support would be the 0.6400 mark, followed by the April 16 daily low of 0.6389. The next support would be 0.6350, followed by the 0.6300 mark.

• AUD/USD recovers from 0.6400 amid improved market sentiment.
• The Aussie Employment data will guide market expectations for RBA rate cuts.
• It is forecasted that Australian employers hired mere 7.2K workers in March.

The AUD/USD pair finds a cushion near the round-level support of 0.6400 in Wednesday’s early American session. A three-day losing spell in the Aussie asset has concluded for now as investors expect that nations other than the United States are also facing stubborn inflation issues.

The Consumer Price Index (CPI) data for the United Kingdom and the New Zealand economies released in Wednesday’s session indicated that the last mile for inflation to return to the 2% target is bumpy. UK’s inflation softened slower than estimated in March while NZ inflation grew as expected in the first quarter of 2024.

This has forced traders to reprice their expectations for initial rate cuts. For the Bank of England (BoE) and the Reserve Bank of New Zealand (RBNZ), investors are now expecting that they will pivot to rate cuts from the November meeting instead of September.

Meanwhile, the market sentiment has improved. Considering bullish overnight futures, the S&P 500 is expected to open on a positive note. 10-year US Treasury yields fall slightly to 4.64% after refreshing a five-month high at 4.7%. The US Dollar Index (DXY) turns sideways after printing a fresh five-month high at 106.40. The US Dollar holds strength as Federal Reserve (Fed) Chair Jerome Powell leaned for keeping interest rates higher for a longer period as inflation data for March was not encouraging.

On the Australian Dollar front, investors await the Employment data for March, which will be published on Thursday. The Unemployment Rate is forecasted to have increased to 3.9% from 3.7% in February. In the same period, Australian employers are estimated to have hired 7.2K workers, significantly lower from 116.5K. Weak employment numbers would lift expectations for rate cuts by the Reserve Bank of Australia (RBA).

• AUD/USD slips to 0.6400 amid Middle East tensions, faded speculation for Fed rate cuts.
• Fed Daly sees no urgency for rate cuts with high inflation and a strong labor demand.
• The Chinese economy has exhibited a strong footing in the first quarter of this year.

The AUD/USD pair slumps to near the round-level support of 0.6400 in Tuesday’s early American session. The Aussie asset has extended its losing streak for the third trading session on Tuesday as the broader market mood is risk-averse due to worsening Middle East tensions and expectations that the Federal Reserve (Fed) will delay rate cut plans to later this year.

Risk-sensitive currencies have come under pressure as escalating Middle East tensions are expected to disrupt global supply chain. The Israeli military is anticipated to retaliate to Iran for its airstrikes on their territory. Meanwhile, US President Joe Biden said that he wont support the counterattack from Israel.

10-year US Treasury yields jump further to 4.68% as speculation for the Fed reducing interest rates in the June and July policy meeting have receded. Robust US Retail Sales data for March has reinforced expectations that there will be no urgency from the Fed for rate cuts.

San Francisco Fed Bank President said on Monday that “There is "no urgency" to cut US interest rates.” With inflation remaining hot and demand for labor remains strong, the Fed is expected to maintain a restrictive interest rate stance until it gains confidence that inflation will sustainably return to the desired rate of 2%.

In the Asian region, stronger-than-anticipated China’s Q1 Gross Domestic Product (GDP) data failed to improve the market sentiment. In the first quarter of this year, the Chinese economy strongly expanded by 1.6% from 1.2% in the last quarter of 2023, revised higher from 1.0%. The Australian Dollar is expected to get benefitted by China’s improving economic outlook.

On the domestic front, the Australian Dollar will be guided by the Employment data for March, which will be published on Thursday. The Unemployment Rate is forecasted to have increased to 3.9% from 3.7% in February. In the same period, Australian employers are estimated to have hired 7.2K workers, significantly lower from 116.5K.

• Aussie Dollar falls to 0.6452 after higher-than-expected US Retail Sales show strong consumer activity.
• Rising US Treasury yields suggest diminishing hopes for Federal Reserve rate cuts,  shifting market expectations.
• Middle East tensions and forthcoming Chinese economic data will shape AUD/USD's short-term path.

The Aussie Dollar extended its losses against the Greenback during the North American session, dropping some 0.08% after hitting a daily high of 0.6493. The AUD/USD trades at 0.6452 following the release of strong US Retail Sales data.

Australian Dollar weakens as robust US economic data dampen rate cut expectations

The US Department of Labor revealed that Sales in March smashed estimates of 0.4% and rose by 0.7% MoM. At the same time, Retail Sales in the control group– used to calculate the Gross Domestic Product (GDP) – jumped from 0.3% in February to 1.1% MoM in March, crushing forecasts of a 0.4% expansion.

Following the data, US Treasury yields soared, a reflection that investors expected fewer interest rate cuts by the Federal Reserve. Data from the Chicago Board of Trade (CBOT) shows traders expecting two rate cuts instead of three toward the end of the year, an indication that rates would end at the 4.75%-5.00% range.

Other data showed that the National Association of Home Builders (NAHB) Housing Market Index remained unchanged at 51 in April due to mortgage rates standing at 7%. NAHB Chairman Carl Harris said, "April’s flat reading suggests potential for demand growth is there, but buyers are hesitating until they can better gauge where interest rates are headed.”

Risk appetite is significantly impacting the AUD/USD, courtesy of tensions arising in the Middle East. The recent offensive by Iran against Israel, which finished without casualties, has underscored the potential volatility in the region and its potential impact on the AUD/USD.

Earlier, New York Fed President John Williams commented that he expects the US central bank to begin to ease policy in 2024 while emphasizing that current policy is restrictive. Regarding the robust retail sales data, he added that strong fundamentals are driving consumer spending.

The lack of economic data from Australia, would keep investors focused on upcoming Chinese data. China’s schedule would feature Industrial Production, GDP, and Retail Sales. If the data proves to be weak, it could undermine the prospects of the AUD/USD and open the door to test 0.6400.

AUD/USD Price Analysis: Technical outlook

The daily chart confirms the AUD/USD is bearishly biased, with traders eyeing a clear break of the February 13 low of 0.6442, once cleared, would refresh yearly lows and open the door to challenge 0.6400. Further downsides are seen below that level, like the November 10, 2023, low at 0.6336. On the other hand, if buyers lift the AUD/USD past 0.6450, look for an impulse move toward 0.6500.

• AUD/USD stages a modest recovery from a two-month low touched on Friday.
• The uptick seems unaffected by the Iranian attack on Israel over the weekend.
• Reduced Fed rate cut bets favor the USD bulls and should cap gains for the pair.

The AUSD/USD pair attracts some buyers on the first day of a new week and recovers a part of Friday's losses to the 0.6455 area, or its lowest level since February 14. Spot prices, meanwhile, react little to the latest geopolitical developments and trade around the 0.6470-0.6475 region during the Asian session, though any meaningful appreciating move still seems elusive. 

Iran launched explosive drones and missiles at Israel late on Saturday in retaliation for a suspected Israeli attack on its consulate in Syria earlier this month, raising the risk of a further escalation of conflicts in the Middle East. The markets, however, remain relatively calm, which is evident from a generally positive tone around the US equity futures and turns out to be a key factor lending some support to the risk-sensitive Australian Dollar (AUD). The US Dollar (USD), on the other hand, stands tall near its highest level since early November amid hawkish Federal Reserve (Fed) expectations and caps the upside for the AUD/USD pair. 

Data released from the US last week did little to ease concerns about still-sticky inflation and reinforced market expectations that the Fed will delay cutting interest rates this year. Adding to this, comments by a slew of influential FOMC members forced investors to push back their expectations for the first rate cut to September from June. The outlook keeps the US Treasury bond yields elevated near the YTD peak touched last week, which, along with persistent geopolitical tensions, should underpin the safe-haven Greenback. This, in turn, warrants some caution before confirming that the AUD/USD pair has bottomed out in the near term. 

Moving ahead, the market focus now shifts to the US economic docket – featuring the release of monthly Retail Sales figures and the Empire State Manufacturing Index. This, along with Fedspeak and geopolitical developments, will drive the USD demand and provide some impetus to the AUD/USD pair ahead of the Chinese macro data dump during the Asian session on Tuesday. Investors this week will also take cues from Fed Chair Jerome Powell's appearance and the release of Australian employment details on Thursday.

• AUD/USD meets with a fresh supply on Friday and drops back closer to the weekly low.
• Weaker Chinese trade data undermine the Aussie amid strong follow-through USD buying.
• The technical setup favours bearish traders and supports prospects for additional losses.

The AUD/USD pair comes under some renewed selling pressure on Friday and extends its steady intraday descent through the early part of the European session. Spot prices touch a fresh daily low following the release of weaker Chinese trade data, albeit manage to hold above the 0.6500 psychological mark and rebound a few pips in the last hour.

Any meaningful recovery, however, still seems elusive in the wake of strong follow-through US Dollar (USD) buying, bolstered by expectations that the Federal Reserve (Fed) will keep interest rates higher for longer amid sticky US inflation. Apart from this, persistent geopolitical tensions stemming from conflicts in the Middle East benefit the safe-haven Greenback and might further contribute to capping the risk-sensitive Aussie.

From a technical perspective, the AUD/USD pair, so far, has managed to defend the 0.6500 mark, which should now act as a key pivotal point. Given that oscillators on the daily chart have just started gaining negative traction, a convincing break below will be seen as a fresh trigger for bearish traders and set the stage for an extension of the recent sharp pullback from the 0.6645 area, or a one-month high touched earlier this week.

Some follow-through selling below the 0.6480 area, or the monthly low, will reaffirm the negative bias and allow the AUD/USD pair to aim back to challenge the YTD trough, around the 0.6445-0.6440 region touched in February. The downward trajectory could extend further towards the 0.6400 mark en route to the next relevant support near the 0.6355-0.6350 zone.

On the flip side, any attempted recovery is likely to confront stiff resistance near the 0.6545-0.6555 region, which coincides with the very important 200-day Simple Moving Average (SMA). This is followed by the 100-day SMA, currently pegged near the 0.6600 mark, above which a bout of a short-covering move has the potential to lift the AUD/USD pair back towards the 0.6640-0.6645 area, or the monthly swing high.

AUD/USD daily chart

• AUD/USD comes under some renewed selling pressure and erodes a part of the overnight gains.
• Reduced Fed rate cut bets, along with geopolitics, underpin the USD and drag spot prices lower.
• Chinese trade data, the US consumer sentiment index and Fedspeak eyed for a fresh impetus.

The AUD/USD pair meets with a fresh supply during the Asian session on Friday and erodes a part of the previous day's goodish intraday move up from the 0.6500 psychological mark. Spot prices currently trade around the 0.6530-0.6525 area, though the downside seems cushioned amid mixed fundamental cues.

The South China Morning Post reported that Chinese Premier Li Qiang will visit Australia in June. This is seen as a sign of improving relations between Australia and China, which, in turn, is seen acting as a tailwind for the Aussie. Any meaningful appreciating move for the AUD/USD pair, however, seems elusive in the wake of the underlying bullish sentiment surrounding the US Dollar (USD), bolstered by hawkish Federal Reserve (Fed) expectations.

The hotter-than-expected US consumer inflation figures released on Wednesday forced investors to push back their bets about the timing of the first interest rate cut to September from June. The outlook keeps the US Treasury bond yields elevated, which, along with persistent geopolitical tensions, assists the USD to stand tall near the YTD peak. This, in turn, might continue to act as a headwind for the AUD/USD pair and warrants some caution for bulls.

Market participants now keenly await the release of Chinese trade balance data, which might influence the China-proxy Australian Dollar (AUD). Later during the early North American session, the Preliminary Michigan Consumer Sentiment Index and speeches by influential FOMC members will drive the USD demand, which, in turn, should provide some impetus to the AUD/USD pair. Nevertheless, spot prices seem poised to register weekly losses, though hold above the monthly swing low, around the 0.6480 region touched on April 1.

• AUD/USD edges up to 0.6539 after US producer inflation hints at easing pressures.
• US Jobless Claims drop, indicating a resilient labor market despite mixed economic signs.
• Federal Reserve officials express concerns over inflation trends, influencing market expectations about the timing and extent of future rate cuts.

The Australian Dollar recovered some territory against the US Dollar yet fell shy of reclaiming key technical resistance levels after Thursday’s US inflation data capped the Greenback's advance. As the Asian session begins, the AUD/USD trades at 0.6539, up by a minimal 0.02% at the time of writing.

AUD/USD shows a slight recovery after US PPI data underperforms expectations

On Thursday, the US Department of Labor revealed March’s Producer Price Index (PPI) with figures registering a 0.2% MoM increase, which is below the anticipated 0.3%. Similarly, the core PPI, which excludes volatile food and energy prices, also recorded a 0.2% increase, falling short of both estimates and the previous month's figure.

Annually based figures showed the PPI increasing by 2.1%, less than expected but up from February's 1.6%. Meanwhile, the core PPI over the same period stood at 2.4%, exceeding both forecasts and the figure from the prior month.

Other data revealed that the number of Americans filing for unemployment benefits fell, as Initial Jobless Claims for the week ending April 6 dipped from 222K to 211K, below estimates of 215K.

Given Thursday’s economic data's mixed outlook, AUD/USD traders booked profits following Wednesday’s plunge of 1.75%, which dragged spot prices to a fresh weekly low of 0.6498.

Elsewhere, Federal Reserve officials remain in a wait-and-see mode, led by New York Fed President John Williams, who commented that recent inflation data is disappointing. Richmond Fed Thomas Barkin added that “inflation data raise the question if we are seeing a shift.” Finally, Boston Fed Susan Collins added that she still sees rate cuts in 2024, though they could be fewer than projected.

In that regard, futures traders of Federal funds rates (FFR) are projecting that the Fed would ease policy twice, as shown by data from the Chicago Board of Trade (CBOT). The December 2024 contract depicts traders expect the FFR to end at 4.97%.

AUD/USD Price Analysis: Technical outlook

From a technical perspective, the AUD/USD tilted slightly bearish after cracking the confluence of the 50 and 200-day moving averages (DMAs) at 0.6541. If buyers conquer that level, the next resistance will be 0.6600. However, failure to do so will drive the exchange rate below 0.6500, opening the door to test April’s 1 low of 0.6483, ahead of the February 13 low of 0.6442.

• AUD/USD finds intermediate support neat 0.6500, more downside remains likely.
• The US Dollar strengthens as market push back Fed rate cut expectations for June.
• Australia’s consumer inflation expectations for next 12 months rose to 4.6%.

The AUD/USD pair finds an interim support near the psychological level of 0.6500 in Thursday’s early European session. The Aussie asset is expected to continue the downside move as faded market expectations for the Federal Reserve (Fed) beginning to reduce interest rates in the first half of this year has dampened appetite for risk-sensitive currencies.

S&P 500 futures have posted nominal gains in the Asian session. While the overall market sentiment is downbeat as investors shift focus to the September policy meeting when the Fed could pivot to rate cuts. Prospects for Fed early rate cuts have waned as the United States inflation for March turned out sticky. The US Dollar Index (DXY) jumps to 105.20, approaching five-month high at 106.00.

The US Bureau of Labor Statistics (BLS) reported on Monday that annual and monthly core Consumer Price Index (CPI), which strips of volatile food and energy prices, rose steadily by 3.8% and 0.4%, respectively, suggested that rate cuts are not appropriate currently.

Meanwhile, expectations for the Reserve Bank of Australia (RBA) reducing interest rates sooner have eased due to a significant increase in consumer inflation expectations. The Melbourne Institute reported that inflation expectations for next 12 months accelerated to 4.6% from prior reading of 4.3%.

AUD/USD witnesses an intense sell-off after failing to sustain the breakout of the Descending Triangle chart pattern formed on a daily timeframe. The Aussie asset is declining towards the horizontal support of the aforementioned pattern plotted from March 5 low at 0.6477.

The Aussie asset falls below the 20-day Exponential Moving Average (EMA) trading near 0.6550, suggesting weak demand for the Australian Dollar.

The 14-period Relative Strength Index (RSI) falls sharply after failing to climb above 60.00, indicating limited upside.

Investors might build fresh shorts if the asset drops below March 28 low at 0.6485. Profits on shorts would be booked near February 13 low around 0.6440 and the round-level support of 0.6400.

In an alternate scenario, fresh upside would appear if the asset breaks above March 21 high at 0.6635. This will drive the asset toward March 8 high at 0.6667, followed by the round-level resistance of 0.6700.

AUD/USD daily chart

• AUD/USD is seen consolidating Wednesday’s post-US CPI slump to over a one-week low.
• Bets that the Fed will delay cutting rates underpin the USD and cap the upside for the pair.
• Softer Chinese inflation figures do little to influence the Aussie or provide any impetus.

The AUD/USD pair oscillates in a narrow trading range during the Asian session on Thursday and consolidates the previous day's hotter US CPI-inspired slump to over a one-week low. Spot prices hold steady above the 0.6500 psychological mark and move little following the release of inflation figures from China.

The National Bureau of Statistics reported that China’s consumer inflation declined more than estimated, by 1% in March as compared to the previous month's rise of 1%. On a yearly basis, the headline CPI decelerated to 0.1% from 0.7% in the previous month, missing expectations for a 0.4% increase. Furthermore, the Producer Price Index, which measures wholesale prices at the factory gate, dropped by 2.8% from a year ago, marking the 18th consecutive month of decline and indicating persistent deflationary pressures. This, to a larger extent, overshadows a jump in Australian consumer inflation expectations to 4.6% for April from 4.3% previous and does little to provide any meaningful impetus to the Aussie.

The US Dollar (USD), on the other hand, ticks lower amid some profit-taking after the previous day's sharp spike to the highest level since November 14 and lends some support to the AUD/USD pair. Any meaningful USD corrective decline, however, still seems elusive in the wake of expectations that the Federal Reserve (Fed) will delay cutting interest rates amid sticky inflation. This, along with a generally weaker tone around the equity markets, should act as a tailwind for the safe-haven buck and cap the risk-sensitive Australian Dollar (AUD), warranting caution for aggressive bullish traders.

• Australian Dollar faces a significant downturn as US inflation figures outpace forecasts, boosting the US Dollar and Treasury yields.
• Traders adjust Fed rate cut projections based on new inflation insights, with a less aggressive easing strategy anticipated.
• Upcoming economic reports, includes China's inflation data and the US PPI.

The Australian Dollar posted losses of more than 1.50% on Wednesday against the US Dollar following the release of a hotter-than-expected inflation report in the United States (US). Traders have begun to price in fewer rate cuts by the US Federal Reserve, a bullish signal for the Greenback. Therefore, the AUD/USD trades at 0.6511, virtually unchanged, as Thursday’s Asian session commences.

AUD/USD falls sharply to 0.6511, reacting to US CPI data

Mach’s Consumer Price Index (CPI) in the US exceeded estimates of 0.3% MoM in headline and core, with both readings edging a tenth higher at 0.4%. Yearly figures clocked 3.5% YoY in general inflation, crushing February’s data, while core CPI was unchanged at 3.8%. Following the release, US Treasury yields soared, the Greenback rallied, and Wall Street plummeted.

Consequently, interest rate futures traders priced in just two rate cuts, as witnessed by data released by the Chicago Board of Trade (CBOT). The Fed funds rate is projected to end the year at 4.99%.

Later, the March minutes of the Federal Open Market Committee (FOMC) revealed that “almost all participants judged that it would be appropriate to move policy to a less restrictive stance at some point this year if the economy evolved broadly as they expected.”

On the Aussie’s front, the economic schedule remains scarce, though traders will watch China’s March inflation report. In the US, further inflation data will be scrutinized, as the Producer Price Index (PPI) is expected to dip, while the number of Americans filing for unemployment benefits is expected to slow down compared to the previous reading.

AUD/USD Price Analysis: Technical outlook

From a price action standpoint, the AUD/USD shifted bearish bias and will face first support at the 0.6500 psychological figure. The Relative Strength Index (RSI) turning bearish, along with the break of key support levels, suggests that further downside is seen.

The AUD/USD first support would be the April 1 low of 0.6481, followed by the February 13 swing low at 0.6443. If those two levels are cleared, the pair will be trading at lower levels for the new year-to-date (YTD), with sellers eyeing the 0.6400 figure.

In the event buyers move in and reclaim the 200-DMA at 0.6603, look for a test of the next supply zone at 0.6631.

• Strong US CPI figures have sent the Aussie tumbling.
• US CPI accelerated 0.4% in March against expectations of a 0.3% reading. The yearly inflation jumps to 3.5% from 3.2% in the previous month
• AUD/USD is under pressure again, with support levels at 0.6480 and 0.6445 on the bears’ focus

Australian Dollar posted a strong reversal on Wednesday. The higher-than-expected US inflation levels have endorsed the Fed’s “higher for longer” stance, crushing risky assets like the Aussie.

Consumer inflation accelerated in the US in March, with the headline figures accelerating to 0.4%, against expectations of a 0.3% reading.  Year-on-year, consumer prices rose at a 3.5% pace from 3.2% in February. The Core inflation accelerated to 0.4% from 0.3% in the previous month, while the yearly rate remained steady at 3.8%.

These levels confirm that the Fed has still some work to do to push inflation towards their 2% target, and practically ditch the markets’ view of three rate cuts in 2024 starting in June.

Later today, the Fed monetary policy minutes will be looked at from a different perspective following the CPI data. On Friday the PPI will add further insight into the inflation picture, although Fed’s Bostic and Williams, both on the hawkish side of the committee, might attract investors’ attention.

The technical picture looks increasingly bearish as the pair is on track to post a strong negative candle today. The 0.6480-0.6500 area might support the pair ahead of the big downside target, 0.6445. Resistances are 0.6550 and 0.6635.

• AUD/USD has entered into a sideways range on the short-term charts. 
• The pair has just formed a bearish candlestick at the range highs and is looking poised to weaken. 
• A move back down is possible towards the range lows at 0.6420. 

AUD/USD is trading in the 0.6620s on Wednesday, ahead of key US data. The pair has entered a sideways trend on the 4-hour chart which is used to assess the direction of the short-term trend. 

AUD/USD 4-hour Chart

At the beginning of April price touched the bottom of the range low at 0.6480 and bounced. After that it started climbing back up to the top of the range. 

On Tuesday AUD/USD formed a bearish Shooting Star candlestick pattern at the top of the range in the 0.6640s. Although the following bar was green and therefore did not confirm the Shooting Star, it was nevertheless a negative sign. The pair has since been trading sideways in the 0.6620s. 

Given AUD/USD has been rejected at the range high and formed a bearish candlestick pattern at the same time, there is a risk of a reversal, and the price starting to move back down towards the range lows again, continuing the sideways trend. 

Both the Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) momentum indicators are showing bearish divergence at the April 4 and April 9 peaks. Whereas price rose up and made a higher high between that period, both indicators failed to follow suit, indicating weakness. 

RSI has just exited the overbought region which is a further bearish sign. It recommends short-term bullish traders close their long bets and open short positions. 

A break below 0.6495 would help provide confirmatory evidence of a new move lower within the range, with a possible target back down at the 0.6420 range lows. 

The cluster of major Moving Averages are likely to provide support at around 0.6450, and could slow the pace of the sell-off.

A break above the April high at 0.6645 would negate the bearish view and could indicate a breakout, with an initial target at the 0.6668 March highs.

• AUD/USD trades in positive territory near 0.6630 on Wednesday, the highest in two weeks. 
• US March inflation report on Wednesday will be in the spotlight as it might offer some hints about inflation trajectory.
• Commonwealth Bank expected three 25 basis points (bps) interest rate cuts by the end of the year, starting from September. 

The AUD/USD pair posts modest gains near two-week highs of around 0.6630 on Wednesday during the early Asian training hours. The US Dollar (USD) struggles to find a clear direction near the 104.00 mark ahead of the release of the US March Consumer Price Index (CPI) inflation figures and the FOMC Minutes on Wednesday.  

The Chicago Fed President Austan Goolsbee, a prominent dove on the Fed’s board, said on Monday that the recent jobs report was “quite strong”, but the Fed must consider how much longer it can maintain its current interest rate stance without it damaging the economy. Goolsbee added that the Unemployment Rate could go higher if interest rates remain high for too long. Minneapolis Fed President Neel Kashkari penciled in two rate cuts for the year but questioned the need to cut the interest rate if inflation remains sideways.

Chair Jerome Powell and many Fed officials emphasized that the main factor in the central bank's rate-cutting decision is when or whether inflation will return to the Fed’s 2% target. Investors will closely monitor the US CPI inflation data, which might offer some hints about the inflation trajectory and the path of monetary policy. The CPI figure is estimated to show an increase of 3.4% year over year in March. The firmer-than-expected reading could dampen expectations for Fed rate cuts in June, while softer data could fuel speculation for rate reductions.

On the Aussie front, after leaving rates on hold at 4.35% at its March meeting, the Reserve Bank of Australia (RBA) and its governor Michele Bullock didn’t indicate the timing of the easing cycle, but investors have already priced in when they believe rate cuts could happen. Commonwealth Bank expected three 25 basis points (bps) interest rate cuts by the end of the year starting from September, while Westpac believes interest rate cuts will begin in September and NAB and ANZ believe it won’t be until November.

• AUD/USD climbs to 0.6635 as US Dollar dips amid upbeat market mood.
• US yields fell as Fed Goolsbee warns about risks to labor market if interest rates remain higher for longer.
• The Australian Dollar will be guided by China’s inflation data for March.

The AUD/USD pair prints a fresh two-week high at 0.6635 in the early American session on Tuesday. The Aussie asset strengthens as the US Dollar extend its downside. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, fell to 103.95 despite traders paring big bets supporting the Federal Reserve (Fed) pivoting to rate cuts from the June meeting.

The S&P 500 is expected to open on a bullish note, suggesting cheerful market sentiment. The market sentiment could turn volatile amid uncertainty ahead of the United States Consumer Price Index (CPI) data for March, which will be published on March. The monthly headline and core inflation data are projected to have grown at a slower pace of 0.3% after rising by 0.4% in February. Though price pressures are expected to grow slowly, the pace at which monthly inflation is expected to grow is still higher than 0.17%, which is required for bringing down inflation to the 2% target.

Fed policymakers have been reiterating that it is appropriate to lower interest rates now as they lack confidence that inflation will sustainably return to 2%.

10-year US Treasury yields fell to 4.39% after Chicago Fed Bank President Austan Goolsbee warned that the Unemployment Rate could increase if interest rates remain high for too long.

Meanwhile, the Australian Dollar capitalizes on risk-on sentiment but will dance to the tunes of China’s CPI data for March, which will be published on Thursday. Monthly inflation is expected to have dipped 0.5% after rising 10% in February. The annual CPI data is anticipated to have increased moderately by 0.4% against the former reading of 0.7%. A decline in the inflation data indicates weak consumer spending.

As a proxy for China’s economic outlook, the Australian Dollar could face pressure if the China CPI data TURNS OUT softer than expected.

• AUD/USD up due to better sentiment, USD dip amid mixed Wall Street results.
• US inflation steady; Fed's positive economy outlook influences currencies.
• US inflation, Australian consumer confidence data critical for economic assessment.

The Australian Dollar posted solid gains on Monday, rising 0.42% against the US Dollar amid an improvement in risk appetite and a light economic calendar. The AUD/USD pair trades at 0.6604, virtually flat, as Tuesday’s Asian session begins.

AUD/USD sees a modest uptick after gaining on Monday, ahead of US CPI

Wall Street’s session concluded with a mixed bag of results. While the S&P 500 and the Dow Jones registered losses, the Nasdaq Composite saw a rise. This divergence was accompanied by a 0.16% decline in the Greenback, as indicated by the US Dollar Index (DXY), which stands at 104.12.

The US economic docket was light, except for the New York Fed Consumer Inflation Expectations for March, rising by 3%, unchanged compared to February’s data. Chicago’s Fed President Austan Goolsbee began the Fed parade on Monday, saying that the economy is on golden path, while emphasizing the economy remains strong due to a tight labor market.

US and Aussie economic data

In the meantime, traders are awaiting the latest inflation report in the United States (US), to have a better grasp of the disinflation process. If prices continue to trend lower, that would be negative for the buck and positive for risk-perceived assets, like the Aussie Dollar.

On Australia’s front, market players would be entertained by the Westpac Consumer Confidence and the NAB Business Confidence, both figures from March.

AUD/USD Price Analysis: Technical outlook

On Monday, the AUD/USD had risen above a downslope resistance trendline at around the 0.6580/90 area, which opened the door for buyers to reclaim 0.6600. They’re gathering momentum, as depicted by the Relative Strength Index (RSI), aiming north, with enough room to enter overbought conditions. If the pair surpasses the April 4 high of 0.6619, the next stop would be intermediate resistance at 0.634, the March 21 high ahead of March 8, and the latest higher high at 0.6667.

On the other hand, the AUD/USD first support would be the 100-day moving average (DMA) at 0.6600. A breach of the latter will expose the April 5 low of 0.6549, followed by the confluence of the 50/200-DMA at 0.6543.

• AUD/USD loses ground amid higher US Dollar after stronger NFP figures on Friday.
• US Nonfarm Payrolls increased to 303K in March, surpassing the expected 200K.
• The further gains in copper and oil prices could support the Australian Dollar.

AUD/USD kicks off the week with extending losses for the second successive session, with the pair trading lower around 0.6560 during the Asian session on Monday. The US Dollar (USD) strengthens, supported by higher US Treasury yields, thereby exerting downward pressure on the AUD/USD pair.

The US Dollar Index (DXY) trades around 104.40, at the time of writing, propelled by a surprising beat from the Nonfarm Payrolls (NFP) report. The robust labor market performance, highlighted by the March report surpassing expectations, reinforces the bullish outlook for the US Dollar.

Despite the positive momentum in the US economy, the likelihood of a rate cut in June from the Federal Reserve (Fed) remains high. The market continues to project a June rate cut with approximately a 70% likelihood, followed by an estimated total easing of roughly 75 basis points (bps) throughout 2024.

The US Bureau of Labor Statistics (BLS) reported a significant increase of 303,000 jobs in March, surpassing the expected 200,000. However, February's previous Nonfarm Payrolls (NFP) growth of 275,000 was revised downward to 200,000. Additionally, US Average Hourly Earnings rose by 0.3% month-over-month in March, meeting expectations. The previous reading was 0.2%. On a yearly basis, there was an increase of 4.1%, aligning with the market consensus but slightly lower than the previous reading of 4.3%.

Market participants are likely closely monitoring higher copper and oil prices, which could potentially provide support for the Australian Dollar (AUD). The Australian Dollar (AUD) faced challenges following the release of unchanged Final Retail Sales and downbeat Trade Balance data from Australia on Friday.

Australia recorded its smallest Trade Surplus in five months in February, attributed to a decrease in iron ore exports. In March, the Reserve Bank of Australia (RBA) maintained its cash rate at a 12-year high of 4.35% for the third consecutive meeting. However, the RBA omitted a previous warning that further rate hikes could not be ruled out.

• Aussie's reversal has been contained above 0.6555, which leaves the positive momentum intact.
• The pair withstood the bullish US Dollar reaction after the NFP release. 
• A clear break of the 0.6620-0.6630 resistance area would confirm a trend shift.

Australian Dollar’s reversal from Thursday’s highs has been contained above the 0.6555 support area, despite the strong US Dollar reaction to the upbeat US employment data. This keeps bulls hopeful of a deeper recovery, with their focus on the resistance area above 0.6600.

US Nonfarm Payrolls increased beyond expectations in March to close a strong first quarter, although a certain moderation observed in the yearly wage growth maintains hopes of Fed cuts alive. This has put a lid on the USD rally which leaves the pair’s bullish momentum intact.

The weekly chart is forming a large bullish candle which signals a potential change in the broader bearish trend. A break of the 0.6620-0.663030 resistance area would confirm the trend change and expose the 0.6670 top. Support levels remain at 0.6555 and 0.6500.

• AUD/USD briefly broke out of a descending channel and rallied. 
• The rally was cut short, however, and the pair retreated back inside the channel.  
• If AUD/USD rebreaks above the previous high of the initial breakout rally, it will be a bullish sign. 

AUD/USD has been falling in a descending channel since the March 8 high at 0.6667.

Over the last three days the pair has risen up from the base of the channel to the highs and briefly broke upper borderline on Thursday before retreating back inside. 

Australian Dollar versus US Dollar: 4-hour chart

A move back above the post-breakout rally peak, at 0.6620, however, would confirm two things. 

First, that the breakout from the channel was a valid bullish breakout, likely to extend higher. 

Second, that the short-term trend had probably reversed from bearish to bullish.

Such a move would probably lead to a move up to a conservative target at 0.6670, calculated as the 0.618 Fibonacci extension of the height of the channel extrapolated from the breakout point higher. 

Further strength could lead to the achievement of the second target at 0.6715, which is the full height (Fib. 1.000) of the channel extrapolated higher.