Technical Analysis

AUD/USD Price Analysis – April 23, 2024

By LonghornFX Technical Analysis
Apr 23, 20244 min

Daily Price Outlook

During the early European trading session, the AUD/USD currency pair maintained an upward trend and stayed well bid around the 0.6450 level, reaching an intraday high of 0.6465. The reason for this upward trend can be attributed to the upbeat release of Australia's Judo Bank Purchasing Managers Index (PMI) data on Tuesday. The positive Australian PMI data indicates a strong expansion in the private sector, which could benefit the Australian Dollar. On the flip side, the risk-on-market sentiment, backed by de-escalated tensions in the Middle East, was seen as another key factor that kept the AUD/USD currency pair higher.

Australia's Mixed PMI Data and Consumer Confidence Impact AUD/USD Pair

On the data front, Australia's Judo Bank Purchasing Managers Index (PMI) for April showed promising signs for the Australian Dollar. The Composite PMI rose to a 24-month high of 53.6, indicating a strong expansion in the private sector, especially in services. However, the Manufacturing PMI improved but stayed just below the expansion mark at 49.9. On the flip side, the Services PMI dipped slightly to 54.2. Meanwhile, the ANZ-Roy Morgan Australian Consumer Confidence declined to its lowest level this year at 80.3, with decreases in economic and financial outlooks, particularly impacting renters.

Therefore, the positive PMI data from Australia, especially the strong expansion in the services sector, boosted the Australian Dollar (AUD) against the US Dollar (USD). However, the slight dip in the Services PMI and the decline in consumer confidence may have tempered some of the gains.

Overall, the PMI data indicates a growing economy, which can influence investor sentiment and impact the AUD/USD currency pair positively, although consumer confidence levels could introduce some volatility.

China's Policy Talks and Tariffs Impact Australia

On the China front, there's talk of the People's Bank of China possibly lowering the Medium-term Lending Facility (MLF) rate, which could reduce funding costs. This could impact Australia due to their strong trade ties. The Loan Prime Rate (LPR) in China remains at 3.45%, a key rate for bank loans. Changes in China's policies can affect Australia's market. Additionally, China has imposed a 43.5% tariff on propionic acid imports from the US, affecting various industries like food and medical sectors.

Middle East Tensions Ease, Boosting AUD/USD Pair

On the geopolitical front, reduced tensions in the Middle East are boosting market confidence, lifting riskier assets like the Australian dollar and contributing to gains in the AUD/USD pair. Iran's decision not to retaliate to Israel's recent strike has eased concerns, leading to a two-day drop in gold prices. Traders are now focusing on economic data and global PMIs, signaling a positive risk sentiment. The more relaxed situation in the Middle East has boosted the AUD/USD pair as market sentiment improves, reflecting increased optimism in riskier assets and decreased demand for safe havens like the US Dollar.

US Dollar Strengthens on Economic Data and Fed Stance

On the US front, the US dollar gained strength due to good job numbers, higher consumer prices, and firm statements from the Federal Reserve. This made investors rethink US interest rates. The Fed's reduced plans for rate cuts are backing the US dollar and pushing gold prices down. Now, they expect the Fed to possibly cut rates in September by about 34 basis points, less than earlier forecasts of three cuts. This could limit gains for the AUD/USD pair as the US dollar strengthens on better economic signs and fewer expected rate cuts.

AUD/USD Price Chart - Source: Tradingview
AUD/USD Price Chart - Source: Tradingview

AUD/USD - Technical Analysis

Currently, the pivot point stands at 0.6465, which serves as a crucial marker for traders monitoring the pair's movement. Resistance levels above this point are set at 0.6494, 0.6536, and 0.6576. These thresholds suggest areas where sellers might regain control, preventing further bullish momentum. Conversely, the support levels are critical to observe, with the immediate support marked at 0.6411. Additional support levels are identified at 0.6373 and 0.6339, which could offer buying opportunities should the price approach these lower boundaries.

Technical indicators provide further insight into the pair's trajectory. The Relative Strength Index (RSI) is at 55, indicating neither overbought nor oversold conditions, suggesting a relatively balanced market dynamic. However, the 50-Day Exponential Moving Average (EMA) at 0.6451 closely aligns with the current price, pointing to a potential consolidation phase in the near term.

Considering the technical landscape, a conservative trading approach would be prudent. Traders might consider initiating a sell position below the minor pivot at 0.64635, targeting a take-profit level at 0.64244, with a stop-loss order set at 0.64855.

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