AUD/USD Current Price: 0.6649
- US Dollar ends four-day positive streak ahead of US CPI data.
- Australian Dollar outperforms NZD and CAD on Tuesday.
- AUD/USD faces increasing downside risks despite rebound.
The AUD/USD rose on Tuesday after falling for five consecutive days. Despite the rebound, the pair is still under pressure, hovering around 0.6650. The key driver has been a better mood across financial markets and a rebound in commodity prices. Events ahead include US inflation data, FOMC minutes on Wednesday, and the Australian employment report on Thursday.
Australian data released on Tuesday showed that the Westpac Melbourne Institute Consumer Sentiment Index increased by 9.4% in April to 85.8 from 78.4 in March. According to the report, the strong recovery “can be largely attributed” to the decision by the Reserve Bank of Australia (RBA) to keep interest rates unchanged at the April meeting. China reported lower-than-expected inflation in March, with the Consumer Price Index rising 0.7% YoY and the Producer Price Index falling 2.5% in the same period. The numbers leave room to further stimulus from the People’s Bank of China (PBoC), while at the same time, points to some weakness in demand.
On Wednesday, RBA Deputy Governor Michele Bullock will participate in a panel discussion on the monetary policy response to the COVID pandemic. On Thursday, Australia will release the March Employment report.
Stocks in Wall Street rose on Tuesday and weighed on the US Dollar, which failed to benefit from higher US yields. The DXY lost ground after four days of gains. Market participants have their attention focused on the US Consumer Price Index, which will be released on Wednesday Later that day, the Fed will publish the minutes of the latest FOMC meeting.
AUD/USD short-term technical outlook
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The daily chart shows AUD/USD peaked on Tuesday at the 20-day Simple Moving Average (SMA) at 0.6683 and pulled back toward 0.6650. Technical indicators offer no clear clues, with RSI and Momentum flat around mid-lines. Price remains well below key moving averages, with the 55-SMA crossing below the 100-SMA, a negative sign for the Aussie. A daily close above 0.6800 would change the current outlook to bullish.
On the 4-hour chart, technical indicators offer a mixed perspective. AUD/USD continues to move in a downward channel. The upside was capped on Tuesday below the 20-period SMA, keeping risks tilted to the downside. If the pair drops below 0.6630, it could accelerate to 0.6600. A recovery above 0.6665 would point to another test of 0.6680. Above the latter, the next critical level is a dynamic resistance, currently at 0.6705.
Support levels: 0.6630 0.6600 0.6570
Resistance levels: 0.6680 0.6705 0.6740
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