CFD Trading Rate Australian Dollar vs US Dollar (AUDUSD)

• AUD/USD extends its winning streak on weak US Dollar.
• The US Dollar weakens as poor US ISM Services PMI dampens the economic outlook.
• Surging global commodity prices strengthen the Australian Dollar.

The AUD/USD pair extends its winning spell for the third trading session on Thursday. The Aussie asset rallies to the round-level resistance of 0.6600 as the US Dollar weakens due to the unexpected decline in the United States Services PMI data for March, reported by the Institute of Supply Management (ISM) on Wednesday.

The US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, extends its downside to 104.00. The US ISM reported that the Services PMI missed expectations, dropping to 51.4 from expectations of 52.7 and the former reading of 52.6. Subindexes such as New Orders and Prices Paid also eased sharply, impacting the US economic outlook.

Going forward, investors will focus on the US Nonfarm Payrolls (NFP) data for March, which will be published on Friday. The labor market data will influence market expectations for Fed rate cuts, which are currently expected in the June meeting.

Meanwhile, the Australian Dollar strengthens as global commodity prices witness a sharp upside. Growing expectations for China’s economic recovery due to reviving domestic demand have also boosted demand for the Australian Dollar.

AUD/USD attempts to deliver a breakout of the Descending Triangle chart pattern formed on a daily timeframe. The downward-sloping border of the aforementioned pattern is placed from March 8 high at 0.6667 while horizontal support is plotted from March 5 low at 0.6477. The chart pattern exhibits a sharp volatility contraction and a breakout can happen in any direction.

The Aussie asset sustains above the 20-day Exponential Moving Average (EMA) trading near 0.6550, suggesting upbeat demand for the Australian Dollar.

The 14-period Relative Strength Index (RSI) rebounds to 60.00. A bullish momentum would trigger if the RSI manages to climb above the aforementioned level.

More 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.

On the flip side, investors might build fresh shorts 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.

AUD/USD daily chart

• AUD/USD edges up, buoyed by Fed's rate talk and mixed US data.
• Fed's data-focused rate policy, strong US job market, and services data are headwinds for the US Dollar.
• Australia's services sector gains boost AUD amid global economic uncertainties.

The Aussie Dollar posted solid gains against the US Dollar on Wednesday, boosted by falling US Treasury yields and a soft US Dollar. Federal Reserve policymakers grabbed the headlines, while US economic data was mixed, with a strong ADP report but softer PMIs. The AUD/USD trades at 0.6565, posting minimal gains of 0.02% early during Thursday’s Asian session.

AUD/USD sees slight uptick as dovish Federal Reserve remarks and uneven US data fuel optimism in Forex markets.

On Wednesday, the market was attentive to the remarks of Fed Chair Jerome Powell, who reiterated the US central bank's readiness to cut rates, albeit with a data-dependent approach. Atlanta Fed President Raphael Bostic's statement, supporting a rate cut in the last quarter of 2024, also drew significant attention.

Lately, Adriana Kugler, one of the newest Fed Governors appointed to the board, stated that the disinflation process would continue, and that would warrant lowering rates at least three times toward the last quarter of 2024.

The Aussie Dollar also benefited from an upbeat market mood as Wall Street snapped two days of losses. US Treasury yields finished flat, a headwind for the American currency. The US Dollar Index (DXY) tumbles more than 0.50%, down to 104.22.

Elsewhere, the March ADP report revealed that private hiring increased by 184K, exceeding estimates and forecasts. In the meantime, the US S&P Global and the ISM Services PMIs, were a touch softer.

In the meantime, Aussie’s data revealed the Judo Bank Services PMI improved from 53.5 in February to 54.4 in March. The report highlighted “This is the fourth consecutive month of improvement, with the services output index increasing by 8.4 points, the largest gain in the series outside of recovery from lockdowns.”

AUD/USD Price Analysis: Technical outlook

From a technical perspective, the AUD/USD shifted to a neutral-upward bias. A ‘bullish harami’ candlestick chart pattern, followed by Wednesday’s large candle breaching the 200-day moving average (DMA) at 0.6543, could pave the way to challenge the 100-DMA at 0.6597, ahead of the 0.6600 mark. The momentum has shifted in favor of the bulls, as the Relative Strength Index (RSI) turned bullish and aims higher.

On the other hand, a drop below the 200-DMA could expose the 0.6500 figure.

• AUD/USD pauses its slide from the March 8 highs following the release of the RBA minutes. 
• The minutes showed risks to the outlook as more balanced and notably did not mention discussing raising interest rates. 
• US data showed a rise in payrolls commensurate with the US’s solid run of employment data. 

The AUD/USD trades marginally higher in the 0.6510s midweek after pivoting and temporarily pausing its almost-month-long broad slide down from the early March 0.6660 highs. 

The key event for the Australian Dollar was the release of the Reserve Bank of Australia (RBA) meeting minutes from the March policy meeting on Tuesday. 

In the minutes, a shift in language was noted by the mention, for the first time, that the Board had not considered the option to raise interest rates. 

On monetary policy, the central thrust appeared to be that the Board agreed “it was difficult to either rule in or out future changes in cash rate,” a statement repeated several times in the minutes.

The balance of risks to the outlook had changed and were “a little more even” than previously, it was noted. 

The minutes showed a shift from a slightly hawkish view to a more “neutral stance,” according to analysts at Westpac. 

In the US, data out on Wednesday showed ADP Employment Change private payrolls registered a rise of 184,000 new workers starting jobs in the month of March, beating analysts’ expectations of 148,000. 

The prior month was revised up from 140,000 to 155,000. The data continued the theme of a robust US labor market, which is likely to support the US Dollar (USD) going forward. 

Other data from Australia showed CoreLogic March house prices rose 0.6%, matching February’s monthly gain, while the Melbourne Institute inflation gauge eased to 3.8% YoY from 4.0% YoY.

• Aussie’s recovery is losing pace, as US macroeconomic data beats expectations.
• US Factory Orders and JOLTS Job Openings endorse the view of a strong economy with a tight labour market.
• Cleveland Fed President, Loreta Mester hints at rate cuts in 2024 but she does not say when.
   

The Australian Dollar bounced up from the 0.6480 support area on Tuesday. Bulls, however, are struggling to find a significant acceptance above the 0.6500 area, which keeps the broader bearish trend intact.

In the US, data from the Census Bureau reported a larger-than-expected recovery in Factory Orders, which confirms the strong momentum of the manufacturing sector, following Tuesday’s bright ISM PMI report.

Beyond that, the US JOLTS Job Openings increased beyond expectations in February. These data have contributed to endorse the view of a strong economy with a tight labour market, which poses a challenge to the Fed's easing plans.

Cleveland Fed President, Loreta Mester, has calmed markets somewhat, hinting at rate cuts later this year but she added that the bank might need more time to confirm that inflation is on its way to the 2% target. Later today, San Francisco Fed CEO, Mary Daly, a moderate hawk, might give some more insight into the bank’s rate outlook.

• AUD/USD faces pressure due to the weak Australian Dollar.
• The RBA didn’t mention the need for more rate hikes in the March’s policy minutes.
• Market sentiment remains downbeat as Fed rate cut expectations for June ease.

The AUD/USD pair struggles to get an auction above the psychological resistance of 0.6500. The Aussie asset is facing pressure despite the US Dollar edging down in Tuesday’s European session after refreshing a four-month high.

The market sentiment shows investors are risk-averse as traders have pared bets favoring Federal Reserve (Fed) rate cuts in the June policy meeting. Considering negative overnight futures, the S&P 500 is expected to open on a bearish note. 10-year US Treasury yields rose sharply to 4.39%. The US Dollar Index (DXY) slips from a fresh four-month high slightly above 105.00 to 104.80.

The near-term appeal of the US Dollar is upbeat due to the firm US economic outlook. The US economy grew at a robust pace of 2.5% in 2023 even though interest rates by the Federal Reserve (Fed) remained historically high. In addition, stronger-than-expected Manufacturing PMI for March has strengthened the outlook further.

On Monday, the US Institute of Supply Management (ISM) reported that the Manufacturing PMI returned to expansion after contracting for 16 straight months.

In today’s session, investors will focus on the US JOLTS Job Openings data for February, which will be published at 14:00 GMT. The economic data will provide fresh cues about the labor demand. US employers are anticipated to have posted 8.74 million job openings, lower than 8.863 million in January.

Meanwhile, the Australian Dollar faces selling pressure as the Reserve Bank of Australia (RBA) policy minutes, released in Tuesday’s Asian session, showed that policymakers do not see the need of more interest rate hikes. In the monetary policy meeting, the RBA kept its Official Cash Rate (OCR) unchanged at 4.35%.

• AUD/USD stays at 0.6490, pressured by surging US Treasury yields and a strengthening US economic outlook.
• Mixed manufacturing PMI readings highlight contrasting economic narratives between the US and Australia.
• Upcoming RBA minutes and comments from central bank officials to offer insights into Australia's monetary policy trajectory.

On Monday, the Australian Dollar registered losses of 0.4% against the US Dollar, sponsored by an improvement in business activity in the United States (US). However, with the Tuesday Asian session beginning, the AUD/USD is virtually unchanged at 0.6490, near the weekly lows at the time of writing.

Australian Dollar struggles for direction against a robust US Dollar, with market eyes on RBA minutes and policy cues.

The economic docket features essential data driving financial markets' price action. Firstly, the Institute for Supply Management (ISM) revealed that March’s Manufacturing PMI improved to expansionary territory for the first time in nearly eighteen months. Figures came at 50.3, exceeding estimates of 48.4 and February’s 47.8. Before the ISM release, S&P Global depicted the US economy as beginning to slow down, as the March number came at 51.9, down from 52.2.

Following the data release, US Treasury yields soared, underpinning the Greenback. The US Dollar Index (DXY), which measures the currency against six peers, aims up 0.42% at 104.96, after briefly peaking above 105.00.

The market reaction is linked to traders cutting bets for a quarter of a percentage point by the Federal Reserve’s June meeting.

Delving into over-the-weekend data, Fed Chair Jerome Powell commented that the US Core PCE aligned with their estimates. He said they need more evidence before cutting rates, adding they aren’t in a hurry to cut rates.

In addition, the Aussie’s Jibun Bank Manufacturing PMI reading for March was 47.3, below estimates of 47.8. According to the report, conditions deteriorated due to falls in new work inflows, leading to a reduction in manufacturing output. This is the second consecutive negative reading in the manufacturing segment.

Upbeat data from China keep the AUD/USD from further sliding, as China’s Caixin PMIs beat estimates in March, with new export orders increasing.

Ahead of the day, AUD/USD traders will dissect the latest Reserve Bank of Australia (RBA) meeting minutes, looking for cues regarding the forward path of monetary policy. As of writing, RBA Assistant Governor Kent is crossing the wires.

AUD/USD Price Analysis: Technical outlook

The AUD/USD seems to have bottomed out at around current levels, yet the Relative Strength Index (RSI) is bearish. If sellers push prices below the March 5 low of 0.6477, look for a pullback toward the February 13 low of 0.6442, ahead of 0.6400. On the flip side, the first resistance would be the 0.6500 mark, followed by the confluence of the 50 and 200-day moving averages (DMAs) at 0.6544.

• The Aussie extends losses against a stronger USD as US data beats expectations.
• The US manufacturing sector expands with the prices sub index at recent highs.
• AUD/USD is testing support at 0.6480 with the key area at 0.6440 on focus.
   

The Australian Dollar resumed its bearish trend on Monday, weighed by US Dollar’s strength following better-than-expected US manufacturing data.

The US ISM Manufacturing PMI improved to 50.03 in March, returning to expansion levels after more than one year, and beating market expectations of a milder improvement to 48.2. beyond that, the Prices Paid subindex has accelerated at its fastest pace in almost two years, posing upside pressures to inflation.

AUD/USD Technical analysis

The Australian Dollar is under growing bearish pressure after having breached the bottom of a triangle pattern, at 0.6530. This level capped recovery attempts on Thursday and Friday, and bears have taken control on Monday.

The pair is now testing support at 0.6480, which closes the path to the big target, at 0.6440. To the upside, the mentioned reverse trendline, at 0.6530 is the immediate resistance before 0.6555.

AUD/USD 4-Hour Chart

• AUD/USD trades sideways around 0.6500 as the focus shifts to US NFP data.
• Fed Powell sees no need to rush for rate cuts.
• Investors await the RBA minutes for fresh guidance on interest rates.

The AUD/USD pair trades sideways in a narrow range slightly above the psychological support of 0.6500 in the early New York session on Monday. The Aussie asset consolidates as investors seek fresh guidance on when the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) will pivot to rate cuts.

The S&P 500 opens on a cautious note after a holiday-stretched weekend due to Good Friday. The US Dollar Index (DXY) moves higher to 104.65 amid a cautious market mood. Investors turn cautious ahead of the United States Nonfarm Payrolls (NFP) data for March, which will be published on Friday.

Firm market expectations for the Federal Reserve (Fed) to cut interest rates keep the upside of the US Dollar capped. Fed Chair Jerome Powell’s commentary that there is no need to rush for rate cuts restricts the downside.

On the Australian Dollar front, investors await the Reserve Bank of Australia (RBA) monetary policy minutes, which will be published on Tuesday. The policy minutes will provide a detailed explanation behind the steady interest rate decision on March 19.

AUD/USD delivers a breakdown of the Ascending Triangle chart pattern near 0.6520 formed on a four-hour timeframe. The upward-sloping border of the aforementioned pattern is plotted from February 13 low at 0.6442 while the horizontal resistance is placed from January 30 high at 0.6626.

Downward-sloping 50-period Exponential Moving Averages (EMA) at 0.6530, indicates that the near-term demand is weak.

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, indicating indecisiveness among market participants.

Investors might build fresh shorts 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.

On the contrary, a sharp recovery move above March 26 high at 0.6560 will drive the asset toward the round-level resistance of 0.6600, followed by March 12 high at 0.6640.

AUD/USD four-hour chart

• AUD/USD holds positive ground near 0.6525, adding 0.16% on the day. 
• The US PCE was up 2.5% YoY in February, in line with the market consensus. 
• The Chinese NBS Manufacturing PMI improved to 50.8 in March against 49.1 prior. 

The AUD/USD kicks off the new week on a positive note around 0.6525. It's a holiday in Australia for Easter Monday, and the market is likely to be mute. Investors will keep an eye on the US ISM Manufacturing Purchasing Managers Index (PMI) for fresh impetus, which is expected to improve to 48.4 in March from 47.8 in February. 

US inflation, as measured by the Personal Consumption Expenditures Price Index (PCE) rose in line with expectations in February, climbing 2.5% YoY in February. The monthly was slightly below the market consensus, rising 0.4% MoM in the same month. Furthermore, the Core PCE, which excludes volatile food and energy prices, rose 2.8% annually and 0.3% monthly, aligning with the estimation. The data suggested a continued trend of inflation, potentially keeping the Federal Reserve (Fed) on hold before it can start lowering interest rates this year. The higher-for-longer US rate narrative is likely to provide some support to the US Dollar (USD) in the near term. 

The Fed Chairman Jerome Powell said on Friday that the recent US inflation data was "along the lines of what we would like to see," and it kept the Fed's baseline for interest rate cuts this year intact. Fed officials continued to pencil in three rate cuts this year. Investors expect the first rate cuts will come at the June meeting.

On the Aussie front, the encouraging Chinese PMI data might cap the downside of the China-proxy Australian Dollar (AUD). The China's National Bureau of Statistics (NBS) reported on Sunday that the monthly NBS Manufacturing PMI improved to 50.8 in March from 49.1 in the previous month. Meanwhile, the NBS Non-Manufacturing PMI rose to 53.0 in March from 51.4 in February. 

• AUD/USD stands still with the market awaiting the US Core PCE inflation figures and personal spending insights.
• Forecasts suggest a slight slowdown in Core PCE inflation for February, with personal income and spending data also in focus.
• Australian economic indicators hint at a cooling economy, increasing speculation on RBA's future rate decisions.

The Aussie Dollar remains subdued against the US Dollar on Friday due to thin liquidity conditions in the observance of Good Friday. A busy economic docket in the United States (US) might entertain Forex market traders with the release of the Personal Consumption Expenditures (PCE) price index and Federal Reserve officials' speeches. The AUD/USD trades at 0.6513, virtually unchanged.

AUD/USD traders eye US key economic data ahead of the weekend

The AUD/USD price action shows traders waiting to release the Fed’s preferred gauge for inflation, the Core PCE for February. The consensus foresees the latter slowing from 0.4% to 0.3% MoM, with annual figures expected to remain unchanged at 2.8% as in January. In the meantime, headline PCE is expected to tick higher from 0.3% to 0.4% MoM and, in the 12 months to February, rise from 2.4% to 2.5%.

Alongside that data, the US Bureau of Economic Analysis (BEA) will release Personal Income and Personal Spending data, which would shed some light on American consumer behavior. According to BBH analysts, the jump in February Retail Sales could underpin personal spending data.

On the Australia’s front, economic data revealed during the week, revealed that monthly inflation was below estimates, with Retail Sales missing forecasts. With the economy beginning to show signs of slowing down, has raised expectations for potential interest rate cuts by the Reserve Bank of Australia (RBA) toward the second half of 2024.

Next week, Aussie’s Judo Bank PMI figures, along with the RBA's latest meeting minutes, could shed some light on the economy's progress.

AUD/USD Price Analysis: Technical outlook

The AUD/SD remains neutral to downward biased. Ahead of the release of US PCE, look for stir resistance at the confluence of the 100 and the 200-day moving averages (DMAs) at 0.6546. Further upside is seen at the 100-DMA at 0.6594, ahead of 0.6600. On the flip side, first support is seen at 0.6500, followed by the March 5 low of 0.6477.

• AUD/USD finds a temporary support near 0.6500 though downside remains favored.
• RBA’s high interest rates have deepened Australia’s cost of living crisis.
• The US Dollar retreats from a six-week high despite upwardly revised Q4 GDP estimates.

The AUD/USD pair finds support slightly below the psychological support of 0.6500 in the early American session on Thursday. The Aussie asset discovers some buying interest as the US Dollar retreats after refreshing six-week high. However, the broader appeal of the Aussie asset is still downbeat as investors remain uncertain ahead of the United States core Personal Consumption Expenditure Price Index (PCE) data for February, which will be published on Friday.

The core PCE will provide cues about when the Federal Reserve (Fed) will begin reducing interest rates. The annual underlying inflation data is estimated to have grown steadily by 2.8%, with monthly growth declining to 0.3% from 0.4% in January.

The US Dollar Index failed to sustain six-week highs near 104.72 despite the final estimate from the US Bureau of Economic Analysis (BEA) for the final quarter of 2023 showing that the economy grew by 3.4%. As per the preliminary estimates, the economy expanded by 3.2%.

Meanwhile, the Australian Dollar broadly remains on the backfoot as the Reserve Bank of Australia's (RBA) higher Official Cash Rate (OCR) has deepened the cost-of-living crisis. The Australian Bureau of Statistics reported that monthly Retail Sales grew at a slower pace of 0.3% in February, against expectations of 0.4% and the former reading of 1.1%.

AUD/USD is expected to test the breakdown of the Ascending Triangle chart pattern near 0.6520 formed on a four-hour timeframe. The upward-sloping border of the aforementioned pattern is plotted from February 13 low at 0.6442 while the horizontal resistance is placed from January 30 high at 0.6626.

Downward-sloping 20- and 50-period Exponential Moving Averages (EMAs) at 0.6525 and 0.6538, respectively, indicate that near-term demand is weak.

The 14-period Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating indecisiveness among market participants.

Investors might build fresh shorts after a pullback move near 0.6530. Profits on shorts would be booked near the psychological support of 0.6500 and February 13 low near 0.6440.

On the contrary, a sharp recovery move above March 26 high at 0.6560 will drive the asset toward the round-level resistance of 0.6600, followed by March 12 high at 0.6640.

AUD/USD four-hour chart

• AUD/USD falls following Federal Reserve Governor Waller's hawkish remarks on interest rates.
• Australian inflation remains steady at 3.4% YoY as traders digest implications for RBA’s monetary policy.
• Upcoming Australian Housing Credit and Retail Sales data eyed for further insight into domestic economic conditions.

The Australian Dollar finished Wednesday’s session virtually unchanged against the US Dollar following the Aussie’s inflation report and a scarce economic docket in the United States (US). Nevertheless, hawkish comments by Federal Reserve Governor Christopher Waller tumbled the AUD/USD as the Asian session began and traded at 0.6524, down 0.14%.

Australian Dollar adjusts to Fed's rate expectations and domestic inflation figures

Waller commented at a speech that rates need to be higher for longer than expected and the need to see more inflation progress before supporting a rate cut. He sees the beginning of the easing cycle in 2024, though he suggests the need to see back-to-back months of inflation data heading to 2%.

Wall Street finished the session mixed, while US Treasury yields tumbled and the Greenback stood flat at 104.29.

The US economic docket was empty on Wednesday. Conversely, Australia’s economic calendar revealed that February’s inflation hit 3.4% YoY for the third straight month. Up next, Housing Credit data for February will be released following Januar’s print of 0.4% MoM. Alongside that, Retail Sales for the same period are expected to slow from 1.1% to 0.4% MoM.

AUD/USD Price Analysis: Technical outlook

After Waller’s remarks, the AUD/USD pushed far below the 200-day moving average (DMA) of 0.6547, with the pair aiming to challenge Wednesday’s lows of 0.6511. Further weakness will drive the pair to test 0.6500, followed by the March 5 low of 0.6477, ahead of the February 13 low of 0.6442.

Otherwise if buyers reclaim the confluence of the 200-DMA and the 50-DMA, that could open the door to challenge the 100-DMA at 0.6592.

• AUD/USD sells off midweek after Australia prints lower-than-expected inflation in February. 
• Another drop in Iron Ore prices, the country’s largest export, further weighs. 
• The US Dollar sees broad-based gains after another strong show of US data. 

AUD/USD is down by over two tenths of a percent in the 0.6610s on Wednesday after the release of Australian inflation data overnight weakened the Australian Dollar (AUD). 

The pair was further undermined by broad based US Dollar (USD) strength, and an over two and a half percent decline in Iron Ore prices, Australia’s premier export. 

The Australian Monthly Consumer Price Index showed inflation rose 3.4% in February compared to the previous year, missing expectations of 3.5% but equal to the 3.4% reported in January, according to data from the Australian Bureau of Statistics. 

The lower-than-expected inflation data will have brought forward estimates of when the Reserve Bank of Australia (RBA) will likely cut interest rates. Previous expectations were for a cut in August, according to Reuters. Lower interest rates are negative for currencies as they reduce foreign capital inflows. 

The US Dollar is up more broadly on Wednesday, however, with the Dollar Index (DXY) which tracks the currency against a trade-weighted basket, up a tenth of percent at the time of publication. 

There appears to be no clear catalyst for the move higher although Tuesday’s US data was on the whole positive, showing a greater-than-expected rise in Durable Goods Orders in February. This adds to the tally of mostly positive data from the US and gives rate-setters at the Federal Reserve something to consider whether or not to begin cutting interest rates. As things stand, the data seems to be calling for a delay on too hasty cutting which is supporting the Buck. 

Iron Ore sold off sharply on Wednesday further weighing on the AUD/USD given its importance in Aussie trade. Iron ore was trading at 107.50 a tonne at the time of publication, according to Tradingeconomics. The commodity was pulled down by a combination of continued negative China fundamentals, Australia’s largest export partner, and a fall in demand after restocking, according to Hellenic Shipping News. 

On a positive note, the Westpac Leading Index in February showed a marginal 0.08% gain after declining 0.09% in the previous month.

• AUD/USD hovers at 0.6533, with US economic strength and upcoming PCE Price Index release setting the tone.
• Recent US durable goods orders exceed expectations, but consumer confidence dips slightly in the face of inflation concerns.
• As Fed officials express divergent views on rate cuts, market eyes turn to Australian CPI data for further direction.

The Aussie Dollar remains flatlines against the US Dollar as Wednesday’s Asian session begins. On Tuesday, the AUD/USD pair, reached a daily high of 0.6559 before retreating 0.11%. At the time of writing, the pair trades at 0.6533 virtually unchanged.

Aussie Dollar steadies as traders digest US durable goods data and brace for key inflation indicators

Wall Street ended the session with losses as a late risk-off impulse sent US equities lower. Traders are bracing for the release of the US Federal Reserve's preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE) Price Index, which is expected to slow from 0.4% to 0.3% MoM and increase from 2.4% to 2.5% in the twelve months to February.

Meanwhile, AUD/USD traders were entertained by the release of the US Durable Goods Orders for February. Readings came at 1.4% Month over Month, exceeding forecasts of 1.1% and January’s -0.9% plunge. The core Durable Goods Orders stood at 0.4% Month over Month, up from -0.3% and above the consensus of 0.4%.

Other data revealed by the Conference Board (CB) showed that Consumer Confidence was steady in March, yet it ticked down to 104.7 from 104.8, a downward revision from the previous month. The survey showed Americans blaming higher prices and soaring borrowing costs.t

The Greenback was underpinned throughout the session, weighing on most G8 Forex currencies, including the Aussie Dollar (AUD). The US Dollar Index (DXY), which tracks the performance of a basket of currencies against the buck, rose 0.07% to 104.29.

Fed speakers divided

The lack of Federal Reserve officials crossing the wires on Tuesday, left traders adrifr to Monday-s speeches. Atlanta’s Fed Raphael Bostic stated the foresees just one cut, instead of 2 for 2024. Meanwhile, Lisa D. Cook added that easing policy too soon increases the risk of inflation becoming entrenched.

Chicago Fed President Austan Goolsbee expects three cuts on the dovish spectrum, though he says he needs more evidence of inflation “coming down.”

Australia’s inflation in focus

AS the Asian session commences, traders are eyeing the release of Australia’s inflation. The consensus is for February’s monthly CPI to be 3.4%.

• The daily RSI reveals a potential increase in bearish momentum if the index remains below 50.
• Under key SMAs on the daily chart, the pair signals rising selling traction, requiring buyers to recover these significant levels.
• After the intense losses on Friday, indicators are consolidating in negative territory.

In Tuesday's session, the AUD/USD observed slight bearish momentum, declining towards 0.6535. The broader outlook reveals that the bears exhibit a somewhat stronger presence, which could maintain a certain level of pressure on the pair. Bears seem to have taken a breather after declining by nearly 0.84% last Friday, but the outlook is still tilted to the short-term downside.

The Relative Strength Index (RSI) presents a negative landscape on the daily chart. The indicator resides in the negative territory with the latest reading just shy of 47. Although currently avoiding oversold conditions, the slight decline in the index is noticeable indicating a continuation of the bearish momentum if the RSI persists below 50. The Moving Average Convergence Divergence (MACD) lays out rising red bars which tends to suggest a mounting selling pressure.

AUD/USD daily chart

Turning the attention to an intraday perspective, the hourly chart reveals a similar trajectory but on a tighter scale. The hourly RSI has just dipped below 45, reinforcing a stronger bearish undertone into the most recent session. The MACD histogram further supports this outlook, with its red bars indicating the presence of negative momentum.

AUD/USD hourly chart

Surveying the larger context, the pair is below the 20, 100, and 200-day Simple Moving Averages (SMAs) which is a typical signal that the sellers are in control following last Friday’s losses. Overall, indicators seem to have consolidated in negative territory and might continue sideways trading while markets await fresh drivers. In the meantime, bears hold in command.

• AUD/USD moves higher to 0.6550 as the US Dollar falls on the Fed’s confidence in inflation, declining to the 2% target.
• The Fed remains stuck with projections of three rate cuts in 2024.
• Investors await the Australian monthly CPI data for fresh guidance.

The AUD/USD pair rises to 0.6550 in Tuesday’s early New York session. The Aussie asset saw buying interest near the psychological support of 0.6500 as the US Dollar eased.

Federal Reserve policymakers believe that inflation is cooling despite remaining hot in the first two months of this year. This has built downward pressure on the US Dollar. The US Dollar Index (DXY) has corrected modestly from a monthly high of 104.50 to 104.10.

On Monday, Chicago Fed Bank President Austan Goolsbee said in an interview with Yahoo Finance that the inflation situation is uncertain due to higher housing inflation. However, he is confident that the fundamental story of inflation returning to the 2% target has not changed.

Going forward, the US Dollar will dance to the tunes of the market expectations for Fed rate cuts. Fed’s ‘three rate cuts’ view in 2024 has boosted the expectations for the Fed to reduce interest rates from the June policy meeting. The CME FedWatch tool shows that the likelihood of rate cut decision in June has increased to 70% against 60%, recorded before the Fed’s monetary policy.

Meanwhile, upbeat market sentiment has improved the appeal for risk-sensitive assets. Later, the Australian Dollar will be influenced by the Consumer Price Index (CPI) data for February, which will be published on Wednesday. Economists have forecasted that monthly CPI grew at a higher pace of 3.5% against 3.4% in January. This would allow the Reserve Bank of Australia (RBA) to lean towards keeping interest rates higher for a longer period.

AUD/USD is directionless just under its 200-Day Moving Average of 0.6551. Economists at BBH analyze the pair’s outlook.

Australia’s Westpac/Melbourne Institute Consumer Sentiment Index fell in March

• AUD/USD stabilizes after gains, with traders eyeing the 200-DMA and upcoming Australian consumer sentiment indicators.
• Mixed messages from Fed officials on rate cuts contrast with potential optimism from RBA’s upcoming commentary.
• Geopolitical tensions and global economic indicators may sway risk appetite, influencing AUD/USD direction.

The Aussie Dollar (AUD) begins the Asian session virtually unchanged vs. the US Dollar after clocking solid gains of 0.41% on Monday. At the time of writing, the AUD/USD trades at 0.6539, beneath the 200-day moving average (DMA).

AUD/USD traders await Aussie’s Consumer Confidence

Wall Street ended Monday’s session with losses as traders braced for the release of a US inflation report. US New Home Sales in February contracted to pre-pandemic levels, decreasing -0.3% MoM from a 1.7% rise in January, from 0.664 million to 0.662 million. Other data showed that the Chicago Fed National Activity Index improved from -0.54 to 0.05.

Elsewhere, the Dallas Fed Manufacturing survey fell from -11.3 in February to -14.4 in March and below expectations for a minimal rise.

On the Aussie’s front, the schedule will feature the Consumer Confidence and the speech of Ellis Connolly, a Reserve Bank of Australia (RBA) member. In the US, traders are waiting for the release of the Fed’s preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE), expected to dip from 0.4% to 0.3% MoM, which headline inflation is foreseen to tick up from 0.3% to 0.4% MoM.

Fed speakers remained split about rate cuts

Atlanta Fed President Raphael Bostic said he expects just one rate cut this year, adding that cutting rates too soon could be more disruptive. At the same time, his colleague, Chicago Fed President Austan Goolsbee, adheres to the majority of the board and expects three cuts, though he said he needs more evidence of inflation “coming down.”

Fed Governor Lisa Cook echoed Bostic's comments, saying that cutting too soon increases the risks of inflation becoming entrenched. She added that the Fed’s dual mandate goals are moving toward better balance.

Given the fundamental backdrop and a positive market mood, the AUD/USD can extend its gains and test key resistance levels. Nevertheless, the sudden escalation of the Russia-Ukraine conflict, alongside the Red Sea crisis, could dent investors' appetite for riskier assets, and seeking safety could underpin the Greenback.

AUD/USD Price Analysis: Technical outlook

The AUD/USD pair bounced off last Friday’s lows and is climbing but faces a key resistance level at 0.6551, the confluence of the 50 and 200-day moving averages (DMA). Once breached, further upside is seen. The next supply zone would be the 100-DMA at 0.6589, ahead of 0.6600. On the other hand, sellers' failure at 0.6550 would sponsor a leg-down, and the pair could re-test the 0.6500 figure.

• AUD/USD climbs after a dip, finding support from a broader USD retreat.
• Fed's mixed messages on interest rates, with Bostic cautious on cuts and Goolsbee open to three, sway market sentiment.
• US New Home Sales dropped, while the Dallas Fed Manufacturing Index dived.

The Aussie Dollar (AUD) recovers against the US Dollar (USD) after hitting a daily low of 0.6509, though broad USD weakness underpins the commodity-linked currency. At the time of writing, the AUD/USD trades at 0.6543, up 0.43%.

AUD/USD gains as Fed speakers offer divergent views on rate cuts

Market sentiment is downbeat, with Wall Street trading with losses. The US economic calendar has featured Fed speakers led by Atlanta’s Fed President Raphael Bostic, who said he expects just one rate cut this year, adding that cutting rates too soon could be more disruptive. At the same time, his colleague, Chicago Fed President Austan Goolsbee, adheres to the majority of the board and expects three cuts, though he said he needs more evidence of inflation “coming down.”

Recently, Fed Governor Lisa Cook echoed Bostic's comments, saying that cutting too soon increases the risks of inflation becoming entrenched. She added that the Fed’s dual mandate goals are moving toward better balance.

Data-wise, US housing market data was revealed, with New Home Sales for February decreasing -0.3% MoM from 0.664 million to 0.662 million. The Chicago Fed National Activity Index improved from -0.54 to 0.05. According to the Chicago Fed, all four categories that compose the index improved on the month.

Recently, the Dallas Fed Manufacturing Index plunged further from -11.3 in February to -14.4 in March. Wages and prices increased during the month, while expectations for future manufacturing activity, generally improved.

AUD/USD Price Analysis: Technical outlook

The AUD/USD pair bounced off last Friday’s lows and is climbing but faces a key resistance level at 0.6551, the confluence of the 50 and 200-day moving averages (DMA). Further upside is seen once breached. The next supply zone would be the 100-DMA at 0.6589, ahead of 0.6600. On the other hand, sellers' failure at 0.6550 would sponsor a leg-down and the pair could re-test the 0.6500 figure.