The Australian Dollar (AUD) experienced slight declines against the US Dollar (USD) on Friday, largely influenced by higher US Treasury yields. Despite attempts earlier in the day to recover losses, the AUD/USD pair struggled amidst prevailing market conditions.
A Reuters poll of 43 economists indicated expectations that the Reserve Bank of Australia (RBA) will likely maintain its current interest rates in June. A significant majority, 90% of economists, foresee no changes in the next quarter, although projections suggest a potential 25 basis-point reduction to 4.10% by the end of 2024. Moreover, 63% of respondents anticipate interest rates declining to 4.10% or below by the year’s close, while a minority (35%) expect rates to remain unchanged.
Meanwhile, the US Dollar (USD) maintained stability despite softer economic data, including a lower-than-expected US Producer Price Index (PPI) and an increase in Initial Jobless Claims. The Federal Open Market Committee (FOMC) revised its outlook, now projecting only one rate cut for the year, down from earlier forecasts of three, bolstering the USD and adding pressure on the AUD/USD pair.
Investors are eagerly awaiting the release of the preliminary US Michigan Consumer Sentiment index, which is expected to provide further insights into consumer confidence and economic sentiment.
Technical Analysis: AUD/USD Consolidates Below Key Levels
On Friday, the Australian Dollar traded around 0.6630 against the US Dollar. Analysis of the daily chart indicates a neutral bias for the AUD/USD pair, as it consolidates within a rectangle formation. The 14-day Relative Strength Index (RSI) has crossed above the 50 level, suggesting a potential bullish inclination.
Immediate support for the AUD/USD pair is identified around the 50-day Exponential Moving Average (EMA) at 0.6605, with further support at the lower boundary of the rectangle formation near 0.6585. Resistance levels are projected near the upper boundary of the rectangle around 0.6700, followed by the May high at 0.6714.
The Australian Dollar’s performance hinges on ongoing economic data releases and market sentiment surrounding US Dollar strength, shaping its near-term trajectory in the currency markets.
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