The Australian dollar (AUD) continues to hold its own against the US dollar (USD). It’s found good support at the resistance range of 0.6615-0.6620. Markets are acutely focused on the Reserve Bank of Australia’s next move. Therefore, the AUD/USD currency pair is one of the most watched currency pairs. Analysts have noted a host of drivers that could shape its path in the near term.
Recent market action suggests that the AUD/USD is trading at important technical levels. The 100-day Simple Moving Average (SMA) is located within the 0.6540-0.6535 area, providing a noteworthy support level. Were AUD/USD to break under this support level, the pair may be able to push even lower toward the 0.6500 psychological level. Should the drop extend, the duo could head to the support at the horizontal band of 0.6480. This region is a long-time, key support zone.
Sentiment in markets has turned sharply in recent weeks, especially with regard to the outlook for the RBA’s monetary policy. Some observers have concluded that the RBA will be unlikely to want to make any further interest rate cuts for the time being. They say this decision is due to continuing inflationary pressures on the Australian economy. Accordingly, traders are recalibrating their positioning on AUD/USD in response to these headwinds.
Along with these local factors, the AUD/USD exchange rate will surely be determined by the coming US payroll data. The ADP Weekly Employment Change and JOLTS Job Openings are important barometers. They’ll provide critical context on the health of the US labor market. A cooling labor market could further reinforce dovish expectations from the US Federal Reserve (Fed), which may lower borrowing costs again, thereby affecting the USD and, by extension, AUD/USD.
Today’s data showed that core inflation in the US increased by 2.8%, a little lower than the 2.9% recorded in August. This macro development would provide another dimension of complexity to the AUD/USD outlook. Labor market health and inflation figures are hugely influential on these currency traders. They look very proactively for economic strength or weakness in these leading indicators.
Our daily chart oscillators are now trending firmly into positive territory for the risk-related AUD/USD. This points to a constructive near-term outlook for the currency pair, in spite of the headwinds already mentioned. Traders are watching important resistance levels intently. If AUD/USD can get through the 0.6645-0.6650 resistance zone, the door will open for a test of its year-to-date high, just above 0.6700.
If AUD/USD breaks below 0.6600, sellers may be in for a lucrative buying opportunity. This overall bearish trend may open up opportunities for rebounds in the 0.6560-0.6555 area. This situation underscores the critical role of technical analysis when informing trading strategies during unpredictable market events.