19/11/24

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The AUD/USD currency pair is currently facing challenges in sustaining gains despite the recent hawkish stance from the Reserve Bank of Australia (RBA). After the release of the RBA’s November Meeting Minutes, the Australian Dollar (AUD) momentarily rose to a four-day high but struggled to maintain upward momentum. The minutes suggested that the RBA is cautious about inflation risks and intends to keep its policy restrictive. Additionally, comments from a Chinese economic official indicated optimism surrounding the recovery of China’s economy, which, along with a subdued performance from the US Dollar (USD), offered some support to the AUD.

Despite these factors, significant weakness in the USD seems unlikely given the prevailing expectations surrounding US economic policies, particularly those inspired by President-elect Donald Trump’s proposals. This expectation has heightened inflation concerns and reduced the likelihood of aggressive rate cuts by the Federal Reserve (Fed). Furthermore, recent remarks from prominent Fed officials, including the chair, reinforced a more cautious outlook on future monetary easing, limiting the Greenback’s decline. The ongoing geopolitical tensions also contribute to the USD’s resilience, putting pressure on the AUD/USD pair, which is hovering around the psychological level of 0.6500.

Looking ahead, market participants are anticipating key US economic data, including Building Permits and Housing Starts, which could influence USD movements significantly. Additionally, the upcoming interest rate decision by the People’s Bank of China is expected to impact sentiment towards currencies like the AUD. While the recent bounce from the lowest levels seen since early August might suggest a possible bottom, caution remains necessary to confirm a sustained recovery.

On the technical side, the recent breakdown below the 0.6560 – 0.6555 support level has drawn bearish sentiment. Oscillators indicate that further downside may be more likely, which could see the AUD/USD pair facing resistance around the 0.6600 level, with the critical 200-day Simple Moving Average near 0.6625 – 0.6630 acting as a potential barrier. Conversely, a downturn below 0.6495 could expose the pair to multi-month lows, with targets set around 0.6400 and possibly extending towards the year-to-date low near 0.6350 – 0.6345.