Technical Analysis

AUD/USD Price Analysis – March 08, 2023

By LonghornFX Technical Analysis
Mar 8, 20233 min

Daily Price Outlook

The AUD/USD currency pair has been unable to halt its downward trend and remains offered at the 0.6600 level. It is under significant selling pressure and has dropped to its lowest point since late December, currently trading at 0.6568. There is a possibility of further declines as RBA Governor Lowe considers a break in the policy-tightening cycle.

Additionally, the AUD/USD currency pair has been under pressure due to hawkish remarks made by Federal Reserve (Fed) Chair Jerome Powell. Powell stated that strong economic data will most likely lead to higher interest rates than previously anticipated to combat inflation.

On the other hand, the Reserve Bank of Australia's (RBA) policy statement was dovish, combined with the continued upward trend of the US Dollar, putting significant pressure on the AUD/USD pair. As a result, the Australian Dollar is currently the worst-performing G10 currency.

Feds Hawkish Stance & Bullish US Dollar

Federal Reserve Chairman Jerome Powell has indicated that strong economic data will likely lead to higher interest rates to curb inflation. As a result, the market-implied probability of a 50 basis point rate hike in March has increased from 30% to 50%, according to CME Group's interest-rate futures.

Market participants expect the Federal Reserve to maintain its hawkish stance and raise interest rates for a longer period to combat persistent inflation. This is contributing to a strongly offered tone around the AUD/USD pair.

Additionally, the US dollar has risen to a three-month high against a basket of currencies, with both the dollar index and dollar index futures climbing around 0.2%, reaching their highest levels since early December.

Reopening of Chinese Economy

RBA Governor Lowe stated that the reopening of the Chinese economy is expected to have a positive impact on the Australian economy. This is due to the fact that China is one of Australia's largest trading partners, and a boost in Chinese economic activity can result in increased demand for Australian exports, such as natural gas, coal, and iron ore.

This statement was seen as a positive development that could help the AUD/USD pair recover some of its strength.

 AUD/USD Price Chart - Source: Tradingview

AUD/USD Intraday Technical Levels

Support      Resistance

0.6708         0.6762

0.6686         0.6792

0.6655         0.6815

Pivot Point: 0.6739

AUD/USD – Technical Outlook

The AUD/USD pair has broken below the 0.6665 level and is currently trading bearishly toward the second target of 0.6550. It is moving within a bearish channel, which increases the chances of further bearish correction and a potential decline toward 0.6400.

The EMA50 continues to provide support for the bearish wave, and negative momentum may be required to achieve the necessary break and reach the expected target.

However, if the pair manages to breach the 0.6665 level, it could stop the expected decline and initiate recovery attempts, with an initial target of 0.6780. The expected trading range for today is between 0.6500 support and 0.6620 resistance.



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