The incremental rise in AUD/USD can be attributed to the market’s response to recent US-UK military actions in Yemen, coupled with the nuanced landscape of mixed US inflation reports. Notably, investor attention seems to be diverting from China’s deflationary data, with a predominant focus on interest rate differentials and the consequential economic implications for Australia. Furthermore, the resilient inflation data from Australia contributes to the perception of potential stability in the Reserve Bank of Australia’s monetary policy, thereby exerting influence on the dynamics of the AUD/USD.
Critical Juncture for AUD/USD: Impact of Lackluster Data from the US and China
Under the Cover of Night: Coordinated US-UK Strikes in Yemen Unveiled After Houthi Assault on US Ship in the Red Sea. White House Spokesman John Kirby highlights the precision targeting of Houthi missile and drone facilities, assessing the impact.
Despite mixed US inflation reports fueling expectations for Fed rate cuts in 2024, AUD/USD surged to a new high at 0.6728, dismissing concerns raised by Fed officials about a March rate cut. Traders shrugged off China’s deflationary data, concentrating on narrowing interest rate differentials. The positive Australian inflation report adds a layer of support, potentially influencing the Reserve Bank of Australia’s stance on monetary policy.
Technical Outlook on the Market
The AUD/USD market concluded its trading activities at approximately $0.66897, with the US Dollar showing a minor gain against the Australian Dollar. Throughout most of the week, the market demonstrated a state of stagnation around $0.66897, despite notable price fluctuations within each daily trading session. The volume of trade indicator displayed tall histograms, indicating substantial investor participation between the last week and this week.
Today’s trading session is characterized by a shooting star candlestick pattern. The long upper shadow signifies a failed attempt to push prices higher, while the absence of a lower shadow indicates limited buying support. This dynamic presents a potential bearish signal.
Looking ahead to the next week, if the price fails to maintain its position around the equilibrium level, as suggested by the Relative Strength Index, there is a potential for a further decline to approximately $0.664.
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