Technical Analysis

AUD/USD Price Analysis – Feb 15, 2024

By LonghornFX Technical Analysis
Feb 15, 20244 min

Daily Price Outlook 

Despite the release of downbeat Australian Employment data, the AUD/USD currency pair managed to stop its downward trend and turned bullish around the 0.6501 level. However, the gains were mainly driven by the sluggish performance of the US dollar, which has been gaining traction in the wake of upbeat US macro data, along with hawkish remarks by several Federal Reserve (Fed) officials, but shortly it lost some of its traction amid sliding US Treasury yields.

Furthermore, Australia's Unemployment Rate rose to 4.1% from 3.9% prior, exceeding the expected 4.0% in January. This was seen as a key factor that kept the lid on any additional gains in the AUD/USD pair.

Australian Economic Developments and Impact on AUD/USD Pair

Despite the release of downbeat Australian employment data on Thursday, the AUD/USD currency pair gained positive momentum possibly due to the improved full-time employment and Governor Bullock's optimistic remarks about the global economy and inflation outlook. Meanwhile, the risk-on market sentiment has played a major role in underpinning the AUD/USD pair.

In January, Australia's seasonally adjusted employment change was only 0.5K, far below the market expectation of 30K. Part-time employment saw a decrease to 10.6K from the previous figure of 46.7K, while full-time employment improved to 11.1K from a significant decline in the previous month. The participation rate remained steady at 66.8%, slightly lower than anticipated.

Additionally, Australia's consumer inflation expectations for February remained unchanged at 4.5%. Governor Michele Bullock of the Reserve Bank of Australia expressed optimism about the global economy's performance, noting that concerns about potential hard landings and recessions have eased, and the economy is positioned to bring inflation down gradually.

Potential Impact of US Economic Indicators on AUD/USD Pair

On the US front, the broad-based US dollar failed to maintain its previous upward trend and faced challenges due to subdued US Treasury yields, signaling a shift in market sentiment. However, the expectations for no rate cuts by the Federal Reserve (Fed) in March surged to nearly 90%, which can help the dollar trim its losses. FedWatch Tool shows investors now anticipate a modest 37% probability of a rate cut in May, with a 53% likelihood of 25 basis points (bps) cut.

Fed Vice Chair Michael Barr reaffirmed confidence in US inflation's trajectory toward the Fed's 2% target. US headline Consumer Price Index (CPI) rose to 3.1% in January, exceeding the expected 2.9% but lower than the previous 3.4%. The higher-than-expected CPI suggests potential inflationary pressures, which could positively impact the dollar's value.

Therefore, the AUD/USD pair will experience upward pressure as subdued US Treasury yields and reduced expectations for Fed rate cuts weaken the US dollar, potentially benefiting the Australian dollar.

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

AUD/USD - Technical Analysis

The Australian Dollar versus the US Dollar (AUD/USD) has exhibited a slight downtrend in the recent 24-hour trading period, with a current price of $0.64848, marking a decrease of 0.10%. This subtle movement reflects the ongoing fluctuations in the forex market, influenced by a myriad of economic factors and investor sentiments globally.

At the heart of today's technical analysis, the pivot point sits at $0.6484, serving as a foundational marker for traders to gauge the currency pair's potential direction. Resistance levels are staged at $0.6511, $0.6553, and $0.6584, sequentially laying out the barriers for potential upward movements. Conversely, support levels are identified at $0.6441, $0.6412, and $0.6380, offering a cushion should the currency pair face downward pressure.

The Relative Strength Index (RSI) for AUD/USD stands at 45, indicating neither overbought nor oversold conditions, thus suggesting a state of equilibrium in market sentiment. The Moving Average Convergence Divergence (MACD) further enriches our analysis with a value of 0.0001 and a signal line at -0.0009, subtly hinting at potential upward momentum as the MACD line has just crossed above the signal line.

The 50-day Exponential Moving Average (EMA), closely aligned with the current price at $0.6483, underscores a tight trading range, suggesting a market in search of direction.

Considering the nuanced interplay of key price levels and technical indicators, the AUD/USD pair presents a neutral to slightly bearish outlook. Investors might consider a strategic approach with a sell limit at $0.65024, targeting a take profit point at $0.64530, while placing a stop loss at $0.65247 to manage risk.

This setup reflects a cautious but calculated response to the current market conditions, emphasizing the importance of vigilance and precision in forex trading.

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