Technical Analysis

AUD/USD Price Analysis – Dec 14, 2023

By LonghornFX Technical Analysis
Dec 14, 20233 min

Daily Price Outlook

The AUD/USD currency pair has maintained its bullish momentum, surging to four-month highs as the US Dollar weakens in response to a dovish outlook from the Federal Reserve (Fed). The pair has shown a robust performance against the US Dollar, reaching its highest levels in four months. This upward trend has continued for two consecutive days, driven by favorable employment data from Australia and a depreciation of the US Dollar.

Federal Reserve's Dovish Stance and Rate Outlook Propel Australian Dollar Against US Dollar

It is noteworthy that the Federal Reserve's decision to keep interest rates steady at 5.5% and Federal Reserve Chair Jerome Powell's dovish stance have been key drivers behind the surge in the Australian Dollar. Powell abstained from declaring victory over inflation and hinted at a more accommodative monetary policy. This move led to a decrease in Treasury bond yields. As a result, investors are currently anticipating three rate cuts in 2024, further contributing to the weakening of the US Dollar.

Therefore, the Federal Reserve's decision to maintain interest rates and Chair Powell's dovish stance boosted the Australian Dollar against the US Dollar, with decreased Treasury yields and anticipated rate cuts in 2024, contributing to USD weakness.

Robust Australian Economic Indicators Drive Positive Outlook for AUD/USD Pair

Moreover, Australia's economic indicators significantly bolstered the Australian Dollar. Consumer Inflation Expectations for December eased to 4.5%, below the prior 4.9%, alleviating some inflation concerns. Although Employment Change data for November surpassed expectations, surging to 61.5K against the projected 11.0K, the Unemployment Rate in Australia increased to 3.9% from the previous 3.7%.

The Australian Dollar's upward trajectory was further supported by positive market sentiment and consumer confidence. ANZ-Roy Morgan's Australian Consumer Confidence weekly survey rose to 80.8 from the previous week's 76.4, while Westpac Consumer Confidence for December showed improvement at 2.7% from the previous decline of 2.6%. These indicators reflect a positive outlook for the Australian economy.

Hence, Australia's strong economic indicators, including lower inflation expectations, robust employment growth, and improved consumer confidence, propelled the Australian Dollar. This positive outlook contributes to the upward momentum of the AUD/USD pair.

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

AUD/USD - Technical Analysis

The Australian Dollar (AUD/USD) presents a bullish narrative as it rides within an upward channel, signifying a robust buying trend. The currency pair is currently supported by the formation of bullish engulfing candles over the $0.6590 mark, indicating a strong uptrend momentum and suggesting an accumulation phase among traders.

A pivotal moment is on the horizon for AUD/USD, as it approaches the critical $0.6690 level. Should it break above this threshold, it could potentially signal a double top breakout, opening a path towards the $0.6750 level or further resistance levels. Such a breakout would confirm the continuation of the current bullish trend, providing traders with significant optimism regarding the pair's trajectory.

The upward channel's support, coupled with the bullish engulfing pattern, underpins a firm uptrend in AUD/USD. Observing the currency pair's ability to sustain above these levels will be critical for traders monitoring for continuation or potential reversals.

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