Technical Analysis

AUD/USD Price Analysis – Jan 30, 2024

By LonghornFX Technical Analysis
Jan 30, 20244 min

Daily Price Outlook 

The AUD/USD currency pair maintained its upward rally and remained well bid above the 0.6615 level. However, the reason for its upward trend can be attributed to upbeat Australia's Manufacturing PMI data, which increased from 47.6 to 50.3, showcasing improvement. Meanwhile, the sluggish performance of the US dollar was seen as another key factor that kept the AUD/USD pair higher. Investors are keeping an close eye on the Federal Open Market Committee (FOMC) statement scheduled for Wednesday, January 31.

Retail Sales Drop Amidst Positive Indicators and AUD Resilience

It is worth noting that Australia's Retail Sales for December unexpectedly dropped by 2.7%, oppose from the predicted 0.9% decrease. This marked a significant shift from the previous 2.0% growth. Interestingly, the Australian Dollar strengthened despite this disappointing consumer spending news. However, the resilience of the AUD can be linked to upbeat Australia's Manufacturing PMI and positive vibes surrounding additional stimulus measures in China, influencing the AUD/USD pair.

On a positive note, Australia's Manufacturing PMI rose from 47.6 to 50.3, indicating improvement. The Services PMI also saw an increase from 47.1 to 47.9, and the Composite PMI rose to 48.1 from December's 46.9. Additionally, the Reserve Bank of Australia's Bulletin suggests that businesses foresee a moderation in price growth over the last six months, expecting prices to stay above the RBA's inflation target range of 2.0–3.0%. Looking ahead, the focus is on Australia's Consumer Price Index (CPI) data expected on Wednesday, projecting a Q4 decline of 0.8% from the previous 1.2%.

Despite Australia's Retail Sales decline, the AUD/USD pair strengthened, likely influenced by positive sentiments from China's additional stimulus.

USD Stability, Rate Cut Expectations, and Global Tensions Impact AUD/USD Pair

Moreover, the broad-based US Dollar showed mixed performance and rebounded slightly after a slight dip on Monday, thanks to a more cautious market mood. However, concerns about potential US military action in response to a drone attack in Jordan could escalate geopolitical tension, which could increase risk aversion and undermine the riskier asset AUD. Investors are eagerly awaiting Wednesday's Federal Open Market Committee (FOMC) statement, expecting the Fed Funds rate to remain at 5.25-5.50%. There's a growing belief in a possible rate cut in March, impacting the US Dollar (USD).

In economic news, the US Core PCE for December matched expectations with a 0.2% monthly increase. However, the yearly Core PCE slightly fell short at 2.9%, below the expected 3.0%. Moreover, the Q4 US Gross Domestic Product Annualized surpassed market expectations, reporting a 3.3% reading compared to the previous 4.9%.

Therefore, the US economic updates, including a matched Core PCE for December and better-than-expected Q4 GDP, may strengthen the USD, potentially impacting the AUD/USD pair.

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

AUD/USD - Technical Analysis

In the current forex market landscape, the AUD/USD pair, as of January 30, is exhibiting subtle changes, trading at 0.66066, marking a marginal decline of 0.01%. Analyzing the 4-hour chart provides insights into the currency pair's technical outlook, highlighting key levels that are of significant interest to traders.

The pivot point, a crucial technical indicator, is set at 0.6583. This serves as a baseline for the day's trading bias. Resistance levels are mapped out at 0.6615, 0.6654, and 0.6685. These levels are essential for traders to watch, as they represent potential ceilings where selling pressure might intensify, thereby capping upward movements. Conversely, support levels are identified at 0.6543, 0.6512, and 0.6475. These points could provide relief in case of a downward trend, offering opportunities for buyers to step in.

The Relative Strength Index (RSI) is at 54, indicating a relatively neutral market momentum with a slight inclination towards bullish sentiment. The Moving Average Convergence Divergence (MACD) shows a value of 0.0005 above its signal line at 0.0003, suggesting the potential for an upward trend. Furthermore, the 50-Day Exponential Moving Average (EMA) is currently at 0.6601, closely aligning with the current price level, adding to the stability of the current trend.

An upward channel pattern is observed in the chart, which typically indicates a sustained bullish trend. This pattern suggests that the AUD/USD pair might continue its upward trajectory, supported by the current technical indicators.

A buy limit order at 0.66064 with a take-profit target at 0.66491 and a stop-loss set at 0.65737 could be a strategic approach to capitalize on the current market conditions.

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