On Thursday, the Australian Dollar (AUD) experienced downward pressure, influenced by a blend of domestic and international factors. The Reserve Bank of Australia (RBA) maintained a hawkish stance during its June meeting earlier this week, keeping the cash rate steady at 4.35%. Despite signaling openness to potential rate adjustments in the future, the central bank emphasized uncertainties in the economic outlook and cautioned about the challenges of managing inflation.
Meanwhile, weaker-than-expected Retail Sales figures heightened speculation of potential interest rate cuts by the US Federal Reserve later in the year. This speculation, if realized, could weaken the US Dollar (USD) and provide support for the AUD/USD pair.
Looking ahead, market participants are keenly awaiting the preliminary Australia Judo Bank Purchasing Managers Index (PMI) for May, scheduled for release on Friday. A positive outcome from this indicator could bolster confidence in the Australian economy, potentially delaying any imminent rate cuts by the RBA and thereby lifting the Australian Dollar against its US counterpart.
In technical terms, the AUD/USD pair remains confined within a descending trend channel since mid-May. Despite recent softness, the pair maintains support above the key 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) suggests ongoing bullish momentum, reinforcing prospects for further upside movement.
For bullish confirmation, a decisive breach above the upper boundary of the descending trend channel around 0.6675 could attract buyers towards the psychological resistance at 0.6700 and potentially extend gains towards 0.6760, a level last seen in early January.
Conversely, sustained weakness below the 100-day EMA support at 0.6590 may expose further downside towards channel support at 0.6575. Below this level, additional support zones lie at 0.6510 and 0.6465, corresponding to previous lows observed in March and May respectively.
The AUD/USD pair remains sensitive to evolving economic data and central bank policies, with traders closely monitoring developments that could impact its trajectory in the near term.
This analysis summarizes the current dynamics influencing the AUD/USD exchange rate, highlighting both the potential for further appreciation and the risks associated with economic uncertainties and central bank decisions.
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