AUD/USD Forecast: Further up comes the 200-day SMA
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UPGRADE- AUD/USD advanced further and approached 0.6500.
- The Dollar’s sell-off lent support to the risk complex.
- Australian inflation figures come next on the docket.
On Tuesday, further selling pressure on the US Dollar (USD) sparked another notable rebound in AUD/USD to the proximity of the 0.6500 hurdle, adding to Monday’s optimism and reaching new multi-day peaks.
Back to the Greenback, discouraging prints from flash PMIs for the month of April ignited a marked selling bias in the currency, dragging the US Dollar Index (DXY) to seven-day lows amidst declining yields and unchanged expectations of a potential delay in interest rate hikes by the Federal Reserve (Fed), possibly until the September meeting.
Furthermore, the Aussie dollar saw daily gains amidst a broader improvement in appetite for riskier assets, driven by reduced geopolitical tensions. Additionally, the uptick in AUD was accompanied by another bullish move in iron ore prices and the second consecutive daily decline in copper prices, despite reaching their highest levels since March 2022 in the previous session.
In terms of monetary policy, the Reserve Bank of Australia (RBA) reiterated its commitment to maintaining current policies in the Minutes of its March meeting. Market sentiment currently indicates a 90% probability of a 25 bps rate cut in 2024, compared to the approximately 50 bps of easing observed earlier this month.
Both the RBA and the Fed are among the final G10 central banks expected to consider interest rate adjustments this year.
With the Fed maintaining a firm stance on tightening monetary policies and the potential for the RBA to initiate an easing cycle later in the year, AUD/USD is likely to face sustained downward pressure in the short and medium terms.
Furthermore, recent Chinese economic data has not provided strong indications of a lasting recovery, which is necessary to support a significant rebound in the Australian dollar.
Data-wise, in Australia, the advanced Judo Bank Manufacturing and Services PMIs came in at 49.9 and 54.2, respectively, in March.
AUD/USD daily chart
AUD/USD short-term technical outlook
The continuation of the recovery could see AUD/USD revisit the important 200-day SMA of 0.6529, which precedes the April high of 0.6644, followed by the March top of 0.6667 (March 8) and the December 2023 peak of 0.6871. Further north, the July high of 0.6894 (July 14) comes just ahead of the June top of 0.6899 (June 16) and the key 0.7000 mark.
In the meantime, if sellers regain control, and the AUD/USD falls below its 2024 low of 0.6362 (April 19), spot may revisit its 2023 low of 0.6270 (October 26) before reaching the round milestone of 0.6200.
Looking at the broader picture, the pair is projected to continue its downward trend while remaining below the important 200-day SMA.
On the 4-hour chart, the pair extends its rebound from recent yearly lows. Nonetheless, the initial support is 0.6362, followed by 0.6338. On the upside, 0.6490 offers immediate resistance before the 100-SMA at 0.6504. In addition, the RSI climbed past the 65 level.
- AUD/USD advanced further and approached 0.6500.
- The Dollar’s sell-off lent support to the risk complex.
- Australian inflation figures come next on the docket.
On Tuesday, further selling pressure on the US Dollar (USD) sparked another notable rebound in AUD/USD to the proximity of the 0.6500 hurdle, adding to Monday’s optimism and reaching new multi-day peaks.
Back to the Greenback, discouraging prints from flash PMIs for the month of April ignited a marked selling bias in the currency, dragging the US Dollar Index (DXY) to seven-day lows amidst declining yields and unchanged expectations of a potential delay in interest rate hikes by the Federal Reserve (Fed), possibly until the September meeting.
Furthermore, the Aussie dollar saw daily gains amidst a broader improvement in appetite for riskier assets, driven by reduced geopolitical tensions. Additionally, the uptick in AUD was accompanied by another bullish move in iron ore prices and the second consecutive daily decline in copper prices, despite reaching their highest levels since March 2022 in the previous session.
In terms of monetary policy, the Reserve Bank of Australia (RBA) reiterated its commitment to maintaining current policies in the Minutes of its March meeting. Market sentiment currently indicates a 90% probability of a 25 bps rate cut in 2024, compared to the approximately 50 bps of easing observed earlier this month.
Both the RBA and the Fed are among the final G10 central banks expected to consider interest rate adjustments this year.
With the Fed maintaining a firm stance on tightening monetary policies and the potential for the RBA to initiate an easing cycle later in the year, AUD/USD is likely to face sustained downward pressure in the short and medium terms.
Furthermore, recent Chinese economic data has not provided strong indications of a lasting recovery, which is necessary to support a significant rebound in the Australian dollar.
Data-wise, in Australia, the advanced Judo Bank Manufacturing and Services PMIs came in at 49.9 and 54.2, respectively, in March.
AUD/USD daily chart
AUD/USD short-term technical outlook
The continuation of the recovery could see AUD/USD revisit the important 200-day SMA of 0.6529, which precedes the April high of 0.6644, followed by the March top of 0.6667 (March 8) and the December 2023 peak of 0.6871. Further north, the July high of 0.6894 (July 14) comes just ahead of the June top of 0.6899 (June 16) and the key 0.7000 mark.
In the meantime, if sellers regain control, and the AUD/USD falls below its 2024 low of 0.6362 (April 19), spot may revisit its 2023 low of 0.6270 (October 26) before reaching the round milestone of 0.6200.
Looking at the broader picture, the pair is projected to continue its downward trend while remaining below the important 200-day SMA.
On the 4-hour chart, the pair extends its rebound from recent yearly lows. Nonetheless, the initial support is 0.6362, followed by 0.6338. On the upside, 0.6490 offers immediate resistance before the 100-SMA at 0.6504. In addition, the RSI climbed past the 65 level.
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