Technical Analysis

AUD/USD Price Analysis – June 13, 2024

By LonghornFX Technical Analysis
Jun 13, 20244 min

Daily Price Outlook

Despite the upbeat Australian data, the AUD/USD pair failed to stop its downward trend and remained well offered around the 0.6643 level, hitting the intraday low of 0.6640.

However, the reason for its downward trend could be linked to the bullish US dollar, which gained traction in the wake of a hawkish stance from the US Federal Reserve (Fed).

In contrast to this, the previously released upbeat Australian data, including higher-than-expected Employment Change and Australia’s Unemployment Rate dropping to 4.0% from April’s 4.1% rate (as expected), was seen as a key factor that kept the lid on any additional declines in the AUD/USD pair.

Impact of Australian Economic Indicators and RBA Policy on AUD/USD Pair

On the AUD data front, Australia's Employment Change for May showed an increase of 39.7K employed persons, surpassing expectations of 30.0K and the previous month's 38.5K rise. The Unemployment Rate dropped to 4.0%, down from April's 4.1%, as anticipated.

However, Australia's NAB Business Confidence index fell to -3 index points in May, the lowest in six months and the first negative reading since last November.

Concurrently, Business Conditions decreased to 6 index points, slightly below the long-term average, indicating a mixed outlook for business sentiment despite the positive labor market data.

Moreover, National Australia Bank's Chief Economist Alan Oster noted concerns about economic growth alongside caution about rising inflation. He expects the Reserve Bank of Australia (RBA) to maintain current interest rates for the foreseeable future.

Meanwhile, RBA Governor Michele Bullock recently indicated that the central bank stands ready to raise interest rates if the Consumer Price Index (CPI) fails to return to the target range of 1% to 3%.

Therefore, the AUD/USD pair see support from strong employment data and a lower unemployment rate, but could face pressure from declining business confidence and potential RBA rate hike signals amid inflation concerns.

Impact of Hawkish Fed and US Economic Data on Gold Prices

On the US front, the broad-based US dollar has been gaining momentum due to a hawkish Fed stance on rate cuts. This bullish US dollar is seen as a key factor keeping AUDUSD pair lower. The Federal Reserve's recent decision surprised markets by projecting only one interest rate cut in 2024, down from the three cuts expected in March.

Meanwhile, this hawkish stance overshadowed softer US consumer inflation figures and led to higher US Treasury bond yields, boosting the US dollar. On the data front, the US Bureau of Labor Statistics (BLS) reported that inflation, measured by the Consumer Price Index (CPI), was unchanged in May for the first time since last June.

The annual inflation rate slightly decreased to 3.3% from 3.4%. The core CPI, which excludes food and energy prices, increased by 0.2% in May and rose 3.4% over the past year, down from a 3.6% increase in April and below the expected 3.5%.

Therefore, the AUD/USD pair faced downward pressure as the hawkish Fed stance bolstered the US dollar against non-yielding assets like gold, dampening demand for the Australian dollar amid mixed economic signals.

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

AUD/USD - Technical Analysis

The AUD/USD pair is currently trading at $0.66450, reflecting a 0.28% decline. The market is exhibiting bearish tendencies as it approaches crucial support levels. The key pivot point to watch is $0.67, a critical level that could dictate the next directional move for the pair.

Immediate resistance is found at $0.67, with subsequent resistances also aligned at $0.67, indicating a significant barrier for bullish attempts. On the downside, immediate support is at $0.66, followed by additional supports at $0.66 and $0.65. These levels are essential for identifying potential buying interest that may stabilize the price.

The Relative Strength Index (RSI) is at 53, suggesting a neutral stance but leaning slightly towards bearish momentum. The 50-day Exponential Moving Average (EMA) is positioned at $0.66, which the current price hovers around, indicating a potential consolidation phase or a pivotal point for future direction.

The current technical indicators suggest a cautious approach. The bearish sentiment below the pivot point of $0.67 indicates potential further downside if the price breaches immediate support levels. Conversely, a break above the resistance could signal a shift towards a bullish trend.

In conclusion, the technical outlook for AUD/USD remains bearish below $0.67. Traders may consider a buy limit order at $0.66271, aiming for a take profit level at $0.66678. A stop loss should be placed at $0.66007 to manage risk effectively.

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