Technical Analysis

AUD/USD Price Analysis – June 11, 2024

By LonghornFX Technical Analysis
Jun 11, 20244 min

Daily Price Outlook

During the European trading session, the AUD/USD currency pair failed to halt its bearish rally and remained under pressure around the 0.6595 level, hitting an intraday low of 0.6592. However, the downward trend can be attributed to risk-off market sentiment, which undermined riskier assets like the Australian dollar and contributed to the AUD/USD pair's declines.

Meanwhile, the decline in Australia's NAB Business Confidence and Business Conditions indices exerted pressure on the AUD currency. On the flip side, the bullish US dollar, backed by robust US jobs data for May, which has reduced the odds of two Federal Reserve interest rate cuts in 2024, was seen as another key factor that kept the AUD/USD pair under pressure.

AUD/USD Pair Analysis: Economic Indicators and RBA Policy Uncertainties

On the AUD front, traders anticipate that the Reserve Bank of Australia (RBA) will maintain higher interest rates this year. RBA Governor Michele Bullock suggested that if the Consumer Price Index (CPI) doesn't return to the target range of 1%-3%, they're ready to increase rates, as reported by NCA NewsWire.

National Australia Bank (NAB) Chief Economist Alan Oster noted concerns about economic growth but also highlighted worries about inflation. He expects the RBA to keep rates steady for a while as they navigate through these contrasting risks, according to the official transcript.

On the data front, Australia's NAB Business Confidence index hit a six-month low of -3 index points in May, turning negative for the first time since November. Business Conditions also dipped to 6 index points, slightly below the long-run average.

On Friday, Australia's Trade Balance widened to A$6,548 million in May, surpassing the expected A$5,500 million and April's balance of A$5,024 million. Imports fell sharply by 7.2% in May, reversing April’s 4.2% increase, while exports contracted by 2.5%, following a 0.6% decline previously.

Therefore, the AUD/USD pair may face pressure due to concerns over Australia's economic growth and inflation, alongside uncertainties regarding RBA's interest rate decisions, exacerbated by negative trade balance and business sentiment data.

Bullish US Dollar Impact on AUD/USD Pair Amidst Positive Jobs Data

On the US front, the broad-based dollar has strengthened following positive jobs data, reducing expectations of an imminent interest rate cut by the Federal Reserve in September. This has kept US Treasury bond yields high, bolstering the dollar.

However, the speculation that the Fed will maintain higher rates for a longer period has lowered the probability of a September rate cut to about 50%, with markets now anticipating only one 25 basis point cut later in the year.

According to the US Bureau of Labor Statistics (BLS), May's US Nonfarm Payrolls (NFP) rose to 272,000, up from April's 165,000. Average Hourly Earnings, a measure of wage inflation, increased to 4.1% YoY in May from April's revised 4.0%, exceeding the market expectation of 3.9%.

Therefore, the AUD/USD pair may face pressure as the stronger US dollar, buoyed by robust jobs data, reduces expectations for a near-term Fed rate cut. This could keep the pair under downward pressure.

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

AUD/USD - Technical Analysis

The AUD/USD pair experienced a slight decline of 0.19%, bringing its price to $0.66020. This minor dip suggests a bearish sentiment in the market, with technical indicators pointing towards potential further declines. As we analyze the 4-hour chart, key support and resistance levels come into sharp focus, guiding traders on possible price movements.

The pivot point is positioned at $0.6612, slightly above the current price, serving as a critical juncture. Immediate resistance is seen at $0.6650, with subsequent resistance levels at $0.6699 and $0.6735.

Should the price manage to break through these levels, it could signal a shift towards a bullish trend. However, the bearish momentum is more pronounced, as indicated by the immediate support at $0.6575. Further support can be found at $0.6538 and $0.6497, levels that could be tested if the downward pressure continues.

The Relative Strength Index (RSI) is currently at 42, indicating a bearish momentum but not yet oversold. This suggests there is room for further declines before a potential rebound. The 50-Day Exponential Moving Average (EMA) is at $0.6639, reinforcing the bearish outlook as the current price remains below this significant moving average.

In conclusion, given the prevailing technical indicators and key price levels, a bearish strategy is advisable. An entry price with a sell order below $0.66267 is recommended, targeting a take profit at $0.65748 while maintaining a stop loss at $0.66596 to manage risk.

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