AUD/USD Price Analysis – Oct 31, 2023

Daily Price Outlook

Despite the positive Australian Retail Sales data, the AUD/USD currency pair ended a three-day winning streak on Tuesday. However, this reversal can be attributed to the resurgence of the US Dollar, which is exerting downward pressure on the AUD/USD pair. Additionally, the Reserve Bank of Australia (RBA) is scheduled to announce its policy decision on November 7. It is widely expected that Australia's central bank will increase interest rates by 25 basis points in the upcoming meeting due to heightened inflation.

Australian Economic Indicators and Impact on AUD/USD Pair

It's worth noting that Australia's Retail Sales showed remarkable performance in September, with a notable increase of 0.9%. This figure surpassed market expectations of 0.3% and marked a substantial improvement compared to the previous month's 0.2% performance.

Looking at Australia's Producer Price Index (PPI), it showed a slight decrease, dropping to 3.8% yearly in the third quarter, compared to the previous quarter's 3.9%. However, on a quarterly basis, the PPI had a remarkable increase, reaching 1.8%, up from the earlier reading of 0.5%.

In the meantime, the Australian Consumer Price Index (CPI) for the third quarter of 2023 reached 1.2%, surpassing both the 0.8% increase in the previous quarter and the market's expected 1.1% for the same period.

Thereby, the Reserve Bank of Australia expressed concerns about inflation due to supply disruptions. Governor Michele Bullock stated that if inflation remains higher than expected, the RBA will take suitable measures.

Hence, the positive retail sales and increased inflation in Australia might strengthen the Australian dollar (AUD), while concerns about inflation and reduced demand could potentially weaken the AUD/USD pair.

Global Economic Developments and Their Impact on AUD/USD Pair

Furthermore, China's NBS Manufacturing Purchasing Managers' Index (PMI) unexpectedly dropped to 49.5 from the previous expansion of 50.2 in July, missing the expected 50.2. The NBS Services PMI also fell to 50.6 in September, lower than the anticipated 51.8 and the earlier reading of 51.7.

There are reports indicating a possible meeting between US President Joe Biden and China's President Xi Jinping in November, following extensive diplomatic efforts aimed at repairing relations.

Meanwhile, US Core Personal Consumption Expenditures Price Index (YoY) slightly decreased to 3.7% from 3.8%. However, the monthly index rose to 0.3%, meeting expectations and up from the previous 0.1%. The University of Michigan Consumer Index exceeded expectations in October, reaching 63.8 against an expected 63.0.

Hence, the negative economic data from China and the potential US-China meeting in November may put downward pressure on the AUD/USD pair.

AUD/USD - Technical Analysis

The AUD/USD currency pair, as of October 31, is witnessing some turbulence, currently trading at 0.63438, a dip of 0.50% within the past 24 hours. In the intricate realm of forex, the asset's key price metrics provide a clearer understanding of its potential trajectory. Specifically, the pivot point for this pair stands firmly at $0.6334. Should the momentum lean bullish, the immediate resistance is seen at $0.6399, with further ceilings expected at $0.6465 and $0.6529. Conversely, if bears dominate, the immediate floor lies at $0.6270, with deeper supports at $0.6206 and $0.6140.

From a technical standpoint, the Relative Strength Index (RSI), a popular momentum oscillator, rests at 49. This figure, just a notch below the neutral 50 threshold, hints at a mild bearish sentiment. Meanwhile, the Moving Average Convergence Divergence (MACD), another revered momentum tracker, paints a somewhat concerning picture. The MACD line trails slightly below its signal line, signaling potential downward momentum on the horizon.

Not to be overlooked, the 50-Day Exponential Moving Average (EMA), which smoothens price data to create a single flowing line, is currently valued at $0.6343. This is nearly identical to the asset's current price, suggesting a neutral stance in the short-term trend. As of now, no distinct chart pattern has emerged, leaving traders and analysts to rely primarily on the aforementioned indicators.

In wrapping up this technical analysis, the AUD/USD showcases a neutral to mildly bearish trend. However, optimism remains. If the currency pair can hold its ground above the crucial pivot of $0.63335, it might tilt the scales towards bullishness. In the days ahead, given the asset's current position amidst its resistance and support zones, it's plausible to anticipate the AUD/USD making a move to test the resistance level at $0.6399. As always, investors are advised to keep their eyes peeled on these instrumental levels and indicators to navigate

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