Technical Analysis

AUD/USD Price Analysis – February 27, 2023

By LonghornFX Technical Analysis
Feb 27, 20233 min

Daily Price Outlook

The AUD/USD pair is currently trading at 0.6728, representing a 0.04% increase in the last 24 hours. After reaching its lowest point in seven weeks, the pair has started to show signs of strength with an increase in bids.

Implications for the Australian Economy and AUD

On February 26, the Australian Bureau of Statistics published its report on Company Operating Earnings Q/Q. According to the report, the gross operating profits of companies increased by 10.6% seasonally adjusted, compared to the expected 1.8% increase.

This report is considered a reliable indicator of the economy's state, as companies are immediately impacted by market conditions, and changes in their earnings can serve as a forecast for future economic activities such as spending, hiring, and investment.

The unexpected increase in gross operating earnings of companies benefited the AUD, which saw gains in response.

US Dollar Index Impact on AUD/USD

The US Personal Consumption Expenditures received attention as the PCE Price Index rose to 5.4% YoY, while the Core PCE Price Index climbed to 4.7% YoY, higher than analysts' predictions and the previous year's figures. The Core PCE Price Index is the Fed's preferred inflation gauge and its increase supports the hawkish attitude of the minutes.

Despite recent gains, the US Dollar Index (DXY) is consolidating with marginal losses at 105.15. The DXY bulls acknowledged hawkish Fed bets and updated the multi-day high, but the lack of major data and events over the weekend triggered the latest price drop.

Upcoming Australian CPI report

Investors will closely monitor the release of the monthly retail sales figures, the primary indicator of consumer spending, on February 27. The data is crucial since consumer spending constitutes the majority of total economic activity. In addition, the market is also anticipating the release of the Current Account data, which has a direct impact on currency demand.

On February 28, the focus will be on the Australian Bureau of Statistics Consumer Price Index (CPI) figures, which reached an all-time high of 8.4% year-over-year last month, according to the data. The market expects this report to indicate a decline to 8.1%.

Moreover, the Reserve Bank of Australia (RBA) has not yet given any indication that it plans to pause its current run of rate hikes. However, the hawkish stance of the Australian central bank was not as robust as that of the Federal Reserve (Fed), which has dampened the growth of AUD.

Fundamentals in the Spotlight Today

The following economic data releases scheduled for today have the potential to significantly impact the pricing of US stock markets:

    * Core Durable Goods Orders m/m is expected to show a 0.1% increase.

    * Durable Goods Orders m/m may experience a 3.7% decrease.

    * Pending Home Sales m/m is anticipated to grow by 0.9%.

AUD/USD Price Chart - Source: Tradingview

AUD/USD Intraday Technical Levels

Support      Resistance

0.6726         0.6739

0.6719         0.6745

0.6712         0.6752

Pivot Point: 0.6732

AUD/USD – Technical Outlook

From a technical standpoint, the AUD/USD pair has broken below a symmetrical triangle pattern that previously provided support at the 0.6780 level. Currently, the pair is finding support at the $0.6700 mark, and a break below this level could expose the AUD to the $0.6650 level.

Both the RSI and MACD indicators support a downtrend as they are holding under 50 and 0, respectively. On the other hand, the AUD/USD's resistance levels are currently at $0.6745 or $0.6780.


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