Technical Analysis

AUD/USD Price Analysis – Feb 08, 2024

By LonghornFX Technical Analysis
Feb 8, 20243 min

Daily Price Outlook 

Despite the risk-on market sentiment, the AUD/USD currency pair failed to stop its downward trend and lost some of its traction around the 0.6490 level. However, the declines were mainly driven by the renewed strength of the US dollar, which recently gained traction in the wake of upbeat US macro data, along with hawkish remarks by several Federal Reserve (Fed) officials. On the flip side, the Reserve Bank of Australia kept interest rates steady and hinted at potential future hikes, which is generally positive for the Australian dollar. This hawkish stance was seen as a key factor that kept the lid on any additional losses in the AUD/USD pair.

Influence of Fed Officials' Stance on AUD/USD Pair

Additionally, some Federal Reserve officials support the idea of keeping interest rates high for a longer time. Federal Reserve Governor Adriana Kugler mentioned that even though inflation seems to be slowing down, she's not ready to lower rates. Minneapolis Fed President Kashkari agrees, saying the Fed needs to be more sure about inflation trends before reducing rates, suggesting there might be two to three rate cuts in 2024. Boston Fed President Collins sees the chances of inflation going above 2% decreasing but admits there are challenges in reaching the target. She wants to see more evidence before thinking about rate cuts. Overall, the Fed is waiting for more inflation data to achieve its goal of a sustainable 2% inflation rate.

Therefore, the cautious stance of several Fed officials on interest rates may influence the AUD/USD pair by potentially strengthening the USD against the AUD due to higher expected interest rates in the US.

Impact of RBA Interest Rate Decision on AUD/USD Pair

Furthermore, the Reserve Bank of Australia (RBA) maintained the interest rate on Tuesday, suggesting a potential hike due to persistently high inflation. Traders in the futures market predict the first rate cut by the RBA may happen in September, rather than August. This positive outlook supports the Australian Dollar, providing momentum for the AUD/USD pair.

Therefore, the RBA's stance on potentially raising interest rates boosts the Australian Dollar, helping the AUD/USD pair to limit its losses.

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

AUD/USD - Technical Analysis

As the currency markets open on February 8th, the Australian Dollar against the US Dollar (AUD/USD) is trading marginally lower at $0.65181, reflecting a subtle 0.04% decline. The currency pair hovers near a pivotal point marked by the 50-Day Exponential Moving Average (EMA) at $0.65420, suggesting potential directional momentum.

The key technical pivot point for AUD/USD stands at $0.65182. This level is crucial as it signifies the balance of buyer and seller momentum. Should the pair ascend, immediate resistance is likely to be encountered at $0.65209, followed by $0.65248 and a more significant threshold at $0.65283. Conversely, should the pair trend downward, it may find support at $0.65151, with further potential cushions at $0.65100 and $0.65058.

With the Relative Strength Index (RSI) at a neutral 46.44, there is room for movement in either direction without immediate overbought or oversold concerns. The proximity of the current price to the 50 EMA suggests that there is a tussle between bearish and bullish sentiment, with the potential for a breakout.

For traders looking to capitalize on the AUD/USD pair's movements, a Sell Limit order at $0.65315 might be considered, targeting a Take Profit level at $0.64897, while maintaining a Stop Loss at $0.65622 to manage risk.

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