Technical and Fundamental Analysis of AUD/USD with Market Sentiment
The AUD/USD pair maintains its critical support level at 0.6000 as the US Dollar stabilizes
FUNDAMENTAL OVERVIEW:
- The AUD/USD pair remains above the 0.6000 level, as the US Dollar attempts to recover from Thursday’s decline.
- The Federal Reserve is anticipated to follow a gradual path toward policy easing.
- Meanwhile, investors look forward to the Australian Q3 CPI data, which could provide new insights into the Reserve Bank of Australia’s interest rate outlook.
The AUD/USD pair is consolidating above the significant support level of 0.6000 during Friday’s European session. The Australian dollar remains stable as the US Dollar steadies following Thursday’s corrective movements. Meanwhile, the US Dollar Index (DXY), which measures the dollar’s strength against six major currencies, is currently around 104.00.
The downside potential for the US Dollar seems limited, driven by increasing expectations that the Federal Reserve’s approach to policy easing will be more gradual than previously thought for the remainder of the year. Additionally, speculation surrounding former President Donald Trump’s chances in the upcoming national elections on November 5 is influencing market sentiment.
Politically, investors anticipate that a potential return of Trump to the White House would lead to increased tariffs and reduced taxes, compelling the Federal Reserve to maintain higher interest rates. This scenario reflects a belief that such policies could impact economic growth and monetary policy decisions.
This month, the Australian Dollar (AUD) has lagged behind its major counterparts, even as investors anticipate that the Reserve Bank of Australia (RBA) will maintain its Official Cash Rate (OCR) at current levels through the end of the year. Recent positive employment data has bolstered expectations that the RBA will refrain from cutting interest rates for the rest of the year.
Market participants are keenly awaiting the Australian Q3 Consumer Price Index (CPI) data set to be released on Wednesday. Inflation in Australia rose by 1% during the second quarter of this year.
Read More – Daily Fundamental And Technical Analysis By Capital Street FX
AUD/USD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
AUD/USD is trading within a down channel.
AUD/USD is moving below all Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Selling Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 0.6663
Immediate support level: 0.6621
HOW TO TRADE AUD/USD
After initially trading higher, the AUD/USD pair encountered resistance. They reversed course, forming a lower low structure as it returned to its major support zone from which the uptrend originated. Currently, it is trading at a critical support level. If AUD/USD fails to rebound from this zone, it could break through its immediate support and decline further.