Technical Analysis

AUD/USD Price Analysis – Nov 02, 2023

By LonghornFX Technical Analysis
Nov 2, 20234 min

Daily Price Outlook

During early European trading on Thursday, the AUD/USD currency pair maintained its upward momentum, remaining strongly above the 0.6400 level. However, this upward trend was fueled by the US Federal Reserve's (FOMC) decision to maintain a stable course, combined with a mix of reports concerning the US economy. This exerted downward pressure on the US dollar and contributed to the losses in the AUD/USD pair. The US Dollar Index (DXY) faced some selling pressure around 106.67, following a retreat from its weekly high of 107.11. Moreover, yields on US Treasury bonds experienced a minor decrease, with the 10-year yield hovering at 4.73%. This decline in yields may have played a role in the weakening of the US dollar.

U.S. Economic Update: FOMC Holds Rates, Mixed Data on Job Market and Manufacturing Sector

It is important to mention that the Federal Open Market Committee (FOMC) chose to maintain unchanged interest rates and uphold a cautious stance on the economy. The FOMC believes that tighter financial conditions could have an impact on the labor market and overall economic activity.

They also noted that recent increases in long-term bond rates have lessened the need for further monetary policy tightening. Currently, the market is only assigning a 22% probability of a rate hike in December, as indicated by the CME FedWatch Tool.

In terms of economic data, the ADP Private Sector Payrolls report for October revealed an increase of 113,000 jobs, which fell short of the anticipated 150,000. On a positive note, the JOLTS job openings data unexpectedly rose to 9.553 million, indicating an increase in job opportunities. However, the ISM Manufacturing PMI for October dipped to 46.7, missing the expected value of 49, and marking the lowest reading since July.

Australian Economic Outlook: RBA Rate Hike Expected with IMF Support

Furthermore, the Reserve Bank of Australia (RBA) is scheduled to announce its decision at the upcoming November meeting. There is an anticipation in the market that the central bank may raise the interest rate by 25 basis points (bps) due to the increasing inflation.

Moreover, the International Monetary Fund (IMF) recently assessed the Australian economy and found it to be robust. They noted that inflation is staying relatively high and suggested that the RBA needs to implement more policy measures to control it. In simpler terms, they believe the RBA should continue tightening policies to keep the economy on track.

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

AUD/USD - Technical Analysis

The Australian Dollar, colloquially known as the "Aussie," has displayed intriguing movements against its American counterpart in recent days. As of the last measurement, the AUD/USD pair stands at 0.64251. A scrutiny of its 24-hour movement paints a picture of mild volatility, with the currency pair navigating the intricate labyrinth of global macroeconomic forces and central bank decisions.

Analyzing the 4-hour chart lends a deeper insight into the currency's short-term price trajectory. The pivot point for the currency pair is currently situated at 0.63824. On the bullish front, traders should keep an eye on the immediate resistance level of 0.64411, followed by the subsequent resistances at 0.64729 and the more ambitious 0.65109. Conversely, on the bearish spectrum, the immediate support is discerned at 0.63400, with subsequent floors established at 0.62889.

The technical indicators weave an intricate tale. The Relative Strength Index (RSI), a key momentum oscillator, stands at 54.65. Traditionally, an RSI reading above 70 is perceived as overbought territory, while anything below 30 suggests oversold conditions. Given that the current RSI value is just above the neutral 50 threshold, the sentiment leans slightly bullish for the AUD/USD pair. Additionally, the 50-Day Exponential Moving Average (EMA) stands at 0.63547. With the price currently situated above this level, it suggests a short-term bullish trend.

The chart has manifested what seems to be an ascending channel pattern. This pattern typically points to a bullish sentiment, and in this context, indicates the AUD/USD pair's consistent higher lows and higher highs.

In summation, the short-term technical landscape for the AUD/USD is cautiously bullish. Given the present technical setup and the currency's positioning above the 50 EMA, there's a possibility for the AUD/USD to test the immediate resistance of 0.64411 soon. As always, forex traders are advised to stay vigilant and monitor global economic cues that could influence currency movements.

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