The Australian Dollar (AUD) showcased resilience in Wednesday’s trading session, bouncing back from intraday losses and aiming to enter positive territory. The volatile performance of the ASX 200 possibly lent support to the AUD, strengthening the AUD/USD pair. However, the persistent strength of the US Dollar exerted downward pressure on the pair.
On Tuesday, the Reserve Bank of Australia (RBA) opted to maintain interest rates at a 12-year high of 4.35%, maintaining this stance for the third consecutive meeting. RBA Governor Michele Bullock emphasized the ongoing battle against inflation. While acknowledging the persistent inflationary pressures, Bullock refrained from providing specific details regarding the timing or likelihood of rate adjustments, indicating the bank’s openness to various possibilities.
Meanwhile, the US Dollar Index (DXY) continued its recent uptrend, attributed to improved US Treasury yields. Investors awaited the interest rate decision from the US Federal Reserve (Fed) scheduled for Wednesday, with the Federal Open Market Committee (FOMC) widely expected to maintain its key federal funds interest rate within a range of 5.25% to 5.5%.
In other market news, the ANZ-Roy Morgan Australian Consumer Confidence index stood at 81.7, slightly lower than the previous week’s reading of 82.2. The People’s Bank of China (PBoC) maintained its interest rate at 3.45%, while Chinese and Australian officials emphasized positive progress in bilateral relations.
Looking at the US economic indicators, Building Permits and Housing Starts both exceeded expectations in February, indicating strength in the housing sector. However, the preliminary US Michigan Consumer Sentiment Index for March declined slightly, contrasting expectations of stability. Industrial Production saw a modest increase, while the US Core Producer Price Index remained consistent with expectations, maintaining its position above 2.0% year-over-year.
On the technical front, the Australian Dollar traded near 0.6540 on Wednesday, with immediate resistance observed at the major level of 0.6550 and the nine-day Exponential Moving Average (EMA) at 0.6561. A breakthrough above these levels could propel the AUD/USD pair towards the psychological level of 0.6600. Conversely, immediate support was identified at the 61.8% Fibonacci retracement level of 0.6528, followed by the psychological level of 0.6500. A breach below these levels might increase pressure on the pair, potentially leading to a retest of March’s low at the 0.6477 level.
