AUD/USD Price Forecast: Climbs to 0.6685 area amid modest USD weakness, ahead of US data


  • AUD/USD rebounds around 50 pips from a nearly two-month low touched this Wednesday.
  • The technical setup warrants caution before confirming a near-term bottom for the major.
  • Traders now look forward to important US macro releases to grab short-term opportunities.

The AUD/USD pair stages a goodish intraday recovery from its lowest level since August 8, around the 0.6535 region touched earlier this Wednesday and for now, seems to have snapped a three-day losing streak. Spot prices climb to a fresh daily high, around the 0.6685 area during the first half of the European session a modest US Dollar (USD) slide, though any meaningful appreciating move still seems elusive. 

The USD Index (DXY), which tracks the Greenback against a basket of currencies, extends the overnight pullback from a three-month peak amid a further decline in the US Treasury bond yields. Meanwhile, the latest Australian consumer inflation figures released today dashed hopes for an interest rate cut by the Reserve Bank of Australia (RBA) before the year-end. This, in turn, underpins the Australian Dollar (AUD) and contributes to the AUD/USD pair's intraday bounce.

That said, firming expectations for a less aggressive policy easing by the Federal Reserve (Fed), along with a generally weaker tone around the equity markets, should act as a tailwind for the safe-haven buck and cap the risk-sensitive Aussie. Traders might also refrain from placing aggressive directional bets ahead of important US macro releases. This makes it prudent to wait for strong follow-through buying before confirming that the AUD/USD pair has formed a near-term bottom.

From a technical perspective, the recent breakdown below the very important 200-day Simple Moving Average (SMA) was seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. This, in turn, suggests that any subsequent recovery beyond the 0.6600 mark might still be seen as a selling opportunity and remain capped near the 0.6630 area, or the 200-day SMA breakpoint. 

The latter should act as a key pivotal point, which if cleared decisively could trigger a fresh bout of a short-covering rally and lift the AUD/USD pair to the 0.6675 intermediate hurdle en route to the 0.6700 round figure.

On the flip side, the daily swing low, around the 0.6535 area could offer some support ahead of the 0.6500 psychological mark. Some follow-through selling should pave the way for a further depreciating move towards the 0.6440-0.6435 support zone. The AUD/USD pair could eventually drop to the 0.6400 round figure and the next relevant support near the 0.6370 region.

AUD/USD daily chart

fxsoriginal

Australian Dollar FAQs

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD holds above 1.0850 after EU inflation data

EUR/USD holds above 1.0850 after EU inflation data

EUR/USD trades marginally higher on the day above 1.0850 in the European session on Thursday. The data from the Eurozone showed that the annual HICP inflation rose to 2% in October from 1.7% in September, helping the Euro hold its ground.

EUR/USD News
USD/JPY falls below 152.50 as markets assess BoJ policy decisions

USD/JPY falls below 152.50 as markets assess BoJ policy decisions

USD/JPY stays under bearish pressure and trades below 152.50 on Thursday. The Bank of Japan (BoJ) left its policy setting unchanged but Governor Ueda noted that the impact of foreign exchange rate on prices had become larger than in the past.

USD/JPY News
Gold holds near $2,780, looks to US PCE Price Index for fresh impetus

Gold holds near $2,780, looks to US PCE Price Index for fresh impetus

Gold stays in a consolidation phase after setting a new record-high of $2,790. US political jitters and Middle East tensions might continue to act as a tailwind for the XAU/USD. Traders keenly await the release of the US PCE Price Index before placing fresh directional bets.

Gold News
Uniswap Price Forecast: Technical outlook suggests a bullish breakout ahead

Uniswap Price Forecast: Technical outlook suggests a bullish breakout ahead

Uniswap is trading slightly below $8 on Thursday after rejecting a key resistance level on Wednesday. A successful close above this threshold could indicate a rally for the decentralized exchange, bolstered by technical indicators showing a bullish crossover pointing to potential upward momentum.

Read more
German economy surprises in the third quarter

German economy surprises in the third quarter

The German economy avoided a technical recession in the third quarter, showing unexpected growth. However, this does not change the fact that the economy remains stuck in stagnation.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures