AUD/USD Price Analysis – Sep 28, 2023

Daily Price Outlook

Despite positive Consumer Price Index (CPI) numbers, the AUD/USD pair failed to gain any positive traction and slipped below the 0.6350 mark. This decline coincided with the release of the Retail Sales report for August, which showed a modest 0.2% growth, falling short of the expected 0.3% increase. Adding to the downward pressure, the US Dollar continued to strengthen, driven by higher US Treasury yields and positive economic indicators. These factors combined to weigh down on the AUD/USD pair.

Australian CPI Rebound and AUD Challenges

It's important to highlight that Australia's monthly Consumer Price Index (CPI) rebounded in August, primarily due to an increase in energy prices. This uptick in inflation has stirred up expectations of a potential interest rate hike by the Reserve Bank of Australia (RBA). Surprisingly, though, the Australian Dollar (AUD) didn't perform well despite these encouraging CPI figures.

Notably, the AUD is currently facing downward pressure, largely because of a risk-off sentiment in the market. Investors are growing more risk-averse, which has had a dampening effect on the currency's performance. Furthermore, the declining prices of commodities have been a significant factor holding back the AUD/USD pair from making substantial gains.

US Dollar Strengthens Amidst Positive Economic Developments and Fed Statements

Across the ocean, the US Dollar Index (DXY) continues its impressive rally, reaching its highest point since December. However, this surge in the US Dollar can be attributed to some positive economic developments in the United States and robust performance of US Treasury yields, which are breaking records. Further adding to the bullish sentiment surrounding the USD are the confident statements coming from Federal Reserve (Fed) board members. Neel Kashkari, President of the Minneapolis Federal Reserve, has hinted at the possibility of future interest rate hikes. However, he has also left the door open for rates to remain unchanged if rate cuts are delayed even further.

Hence, the strengthening US Dollar due to robust economic factors and potential interest rate hikes could put downward pressure on the AUD/USD pair.

Global Economic Concerns and US Data Awaited: Impact on Currency Markets

Another factor putting pressure on the AUD/USD pair is the concerning situation in China. Evergrande, the world's most heavily indebted property developer with over $300 billion in debts, is grappling with a severe crisis. The chairman of the company is even under police scrutiny, adding to the overall uncertainty.

Traders are also closely monitoring the upcoming release of the US Gross Domestic Product Annualized, which is expected to remain at 2.1%, scheduled for Thursday. On Friday, the Core Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred gauge for consumer inflation, is anticipated to drop from 4.2% to 3.9%.

AUD/USD - Technical Analysis

The AUD/USD pair exhibited a distinct downtrend, nearing our initial forecasted target of 0.6330. We project a continued bearish momentum with an aim to reach the subsequent level at 0.6275. This outlook is underpinned by the bearish pressure exerted by the EMA50.

It's imperative to note that the persistence of this bearish trend hinges on the price maintaining its position below the 0.6400 mark. For today's trading landscape, we anticipate a range between a support level at 0.6300 and a resistance threshold at 0.6400.