CFD Trading Rate Australian Dollar vs US Dollar (AUDUSD)

• Australian Dollar gained over 1% against the US Dollar, on Wednesday.
• US April CPI rose by 0.3% MoM, core CPI dipped as expected.
• Australian wages grew less than estimated, hinting at easing inflationary pressures.

The Australian Dollar surged more than 1% against the US Dollar on Wednesday after data showed that consumer inflation moderated in April, with the underlying Consumer Price Index (CPI) edging lower for the first time in six months. As Thursday’s Asian session begins, the AUD/USD trades at 0.6695, virtually unchanged.

AUD/USD climbs as inflation moderates in both Australia and the US

Inflation in the US began to show signs of cooling after posting consecutive readings of stalling, which sparked a change of tone amongst Federal Reserve officials.

The US Department of Labor revealed that April’s CPI rose by 0.3% MoM, down from March’s 0.4% and estimates. The so-called core CPI, which excludes volatile items like food and energy, dipped from 0.4% to 0.3% as expected.

At the same time, Retail Sales were unchanged in April, at 0% MoM, missing projections of a 0.6% increase as higher borrowing costs and mounting debt, weighed on American consumers.

Minneapolis Fed President Neel Kashkari stated that, given the higher government debt, achieving the 2% inflation target might necessitate higher borrowing costs in the near term. He expressed surprise at the resilience of consumer spending and highlighted the critical question of "how restrictive monetary policy is.”

On the Aussie’s front, wages increased less than estimated in Q1 2024, hinting that inflationary pressures could be easing. The Wage Price Index (WPI) came at 0.8% QoQ, down from 1% in Q4 2023, and missed estimates of 0.9%.

Ahead in the economic docket is Australia’s Employment report. Estimates suggest the economy added 23.7K employees to the workforce after laying off 6.6K in March. The unemployment rate is forecast to increase to 3.9% after ticking higher to 3.8% previously.

AUD/USD Price Analysis: Technical outlook

The daily chart suggests that the AUD/USD uptrend will continue, but buyers must decisively surpass the 0.6700 figure. Momentum is on their side, as the Relative Strength Index (RSI) aims up, shy of turning overbought.

That said, once 0.6700 is cleared, the next stop would be the psychological 0.6750 figure, followed by the 0.6800 mark. Conversely, if AUD/USD stays below 0.6700, look for a pullback to the May 3 high at 0.6647, ahead of diving to 0.6600.

• AUD/USD has rallied up to tough resistance and stalled. 
• It must break decisively above this barrier to continue to short-term uptrend higher. 
• A successful break might lead to a move all the way up to the end of wave C of a Measured Move price pattern.

AUD/USD has reached key long-term resistance at around 0.6650 and has stalled. 

AUD/USD 4-hour Chart

The pair is probably in a short-term uptrend, however, evidenced by the rising sequence of peaks and troughs since the April 19 bottom. Given the old saying that “the trend is your friend”, this means the odds overall favor AUD/USD going higher. 

However, AUD/USD needs to break decisively above the resistance at 0.6650 to continue trending higher.

A decisive break is one which is accompanied by a long green candlestick that breaks and closes near its high or three green candlesticks in a row that break above the level.

If AUD/USD can successfully break above the resistance level it will probably move up to the level of the May 8 high at 0.6667. A break above that would be highly bullish and lead to a move up to a target at around 0.6690. The latter target is generated by a possible Measured Move pattern that AUD/USD has formed since the April 19 lows. 

Measured Moves are large zig-zag like patterns composed of three waves, usually labeled A, B and C. The general expectation is that wave C will be either the same length as A or a Fibonacci 0.681 ratio of A. 

Wave C has already reached the Fibonacci 0.681 ratio target when it rallied up to the May 3 highs, however, it could also achieve the target where C=A at 0.6690. 

On the other hand, a decisive break below the red trendline would be a bearish sign and could denote a change of the short-term trend.

• AUD/USD holds at 0.6624, resisting pressure from Powell's hawkish stance after US PPI rises 0.5% MoM.
• Higher April PPI fuels concerns over extended inflation; Powell's confidence in disinflation wanes, foresees 2% GDP growth.
• Australia's 2024-25 budget returns to deficit; ANZ cites fiscal easing of 0.25-0.5% GDP.
• Key Australian data ahead: Wage Price Index expected stable at 0.9% QoQ, 4.2% YoY.

The Australian Dollar registered gains against the US Dollar on Tuesday, even though inflation in the United States (US) edged, spurring hawkish remarks by Fed Chair Jerome Powell. The AUD/USD trades at 0.6624, virtually unchanged as Wednesday’s Asian session commences.

AUD/USD holds above 0.6600 as markets await Australia's Wage Price Index

Federal Reserve Chair Jerome Powell hit the wires after releasing the Producer Price Index (PPI). He said that, although he anticipates inflation to continue declining, he is less confident about the disinflation outlook than he was previously. Powell also noted that the Gross Domestic Product (GDP) is expected to grow by 2% or more, attributing this positive forecast to the strength of the labor market.

Meanwhile, the US Bureau of Labor Statistics (BLS) revealed the Producer Price Index (PPI) rose by 0.5% MoM in April, above the 0.3% consensus and March’s -0.1% contraction. Core PPI also jumped by 0.5% MoM, above projections of 0.2%.

On Australia’s front, the budget for 2024-25 returns to a deficit after printing a surplus of $9.3 billion in 2023-24. ANZ analysts commented, "The amount of net new spending in 2024-25 ($9.5bn) is consistent with our previously expressed view that the Budget would contain a discretionary fiscal easing equivalent to around ¼ to ½% of GDP in that year.”

In the meantime, the Aussie’s economic docket will feature the release of the latest Wage Price Index (WPI), which is expected to remain steady at 0.9% QoQ and 4.2% YoY.

AUD/USD Price Analysis: Technical outlook

In the short term, the pair is neutral to upward biased, trading near this week’s high. Bulls are eyeing a break of the May 3 daily high of 0.6648, which could pave the way for further gains.

In that outcome, the next key resistance level would be 0.6700, followed by the year-to-date (YTD) high of 0.6728. Once surpassed, up next would be the December 28 high of 0.6871

Conversely, if sellers drag the AUD/USD exchange rate below 0.6600, look for a pullback beneath the 100-day moving average (DMA) at 0.6569, followed by the 50-DMA at 0.6546. Once cleared, the next stop would be the 200-DMA at 0.6521.

• AUD/USD moves higher to 0.6620 amid cheerful market mood and a decline in the US Dollar.
• Stubborn US PPI data fails to boost the US Dollar’s appeal.
• Economists expect that Australia’s Wage Price Index grew steadily in Q1 of this year.

The AUD/USD pair rises further to 0.6620 in Tuesday’s New York session. The Aussie asset strengthens as the US Dollar comes under pressure even though the United States Producer Price Index (PPI) report for April has turned out slightly hot. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to near the crucial support of 105.00.

Annual headline, and the core PPI data that strips off volatile food and energy prices grew in line with estimates of 2.2% and 2.4%. Monthly headline and core PPI rose strongly by 0.5%, beat the consensus and prior readings. Higher prices by business owners are majorly the outcome of rising input prices or robust household spending or a mix of both.

A large uptick in the producer inflation exhibits signs of persistent price pressures, which could negatively influence speculation for rate cuts by the Federal Reserve (Fed), for which financial markets expect that the September meeting will be the earliest point.

Meanwhile, the market sentiment is positive as investors shrugged off uncertainty of the US Consumer Price Index (CPI) data for April, releasing on Wednesday. The S&P 500 opens on a slightly bullish note. The US inflation data has remained hotter-than-expected in the first quarter of this year. A similar set of numbers would dent Fed rate-cut prospects for the entire year.

On the Australian Dollar front, investors await the Q1 Wage Price Index data, which will be published on Wednesday. Quarterly and annual wage inflation data is forecasted to have grown steadily by 0.9% and 4.2%, respectively. Persistent wage growth data would flare up upside risks to inflation, which would force the Reserve Bank of Australia (RBA) to maintain a restrictive interest rate framework for a longer period.

• AUD/USD is consolidating after pulling back from its May 3 peak. 
• A break above 0.6624 would likely result in a volatile move higher
• AUD/USD may have formed a Measured Move with a final target at around 0.6690.

AUD/USD is trading in the 0.6610s on Monday as it continues its sideways consolidation after pulling back from its May 3 peak. 

Despite oscillating sideways for the last week, the pair is probably in a short-term uptrend, evidenced by the rising sequence of peaks and troughs since the April 19 lows.  

AUD/USD 4-hour Chart

Given the old saying that “the trend is your friend”, therefore, the odds favor AUD/USD going higher. 

AUD/USD has attempted but failed to break above the 0.6624 resistance level on several occasions. Nevertheless, a break would provide confirmation of further upside to the next target at the 0.6649 May 3 high. 

Assuming AUD/USD successfully breaks above 0.6624 it will probably result in a highly volatile move to the upside, since the level has been touched on multiple occasions which usually results in a strong move once broken. 

The next target higher would probably be at around 0.6680-90, generated by a possible Measured Move pattern that AUD/USD has formed since the April 19 lows. 

Measured Moves are like large zig-zags composed of three waves, labeled A, B and C. The general expectation is that wave C will be either the same length as A or a Fibonacci 0.681 of A. 

Wave C has already reached the Fibonacci 0.681 target at the May 3 highs, however, it could also achieve the target where C=A at 0.6690. 

A decisive break below the red trendline would be a bearish sign, suggesting a potential reversal of the trend. 

A decisive break would be one accompanied by a long red candle which closes near its low or three red candles in a row that break below the trendline. 

• AUD/USD trades with mild positive bias near 0.6605 on Monday. 
• Fed officials reiterated on higher-for-longer mantra, supporting the USD against its rivals. 
• Australia's government stated inflation could moderate to the RBA's target range by the end of 2024, faster than predicted in December.

The AUD/USD pair posts modest gains around 0.6605 during the early Asian session on Monday. Investors await the key US economic data this week for fresh catalysts, including the Consumer Price Index (CPI), Producer, Price Index (PPI), and Retail Sales. 

On Friday, San Francisco Fed President Mary Daly highlighted the need for prolonged restrictive policy to achieve the Fed's inflation targets. Meanwhile, Atlanta Fed President Raphael Bostic said that the central bank is probably still planning to cut its interest rates this year, despite the uncertain outlook. The cautious approach from the US Federal Reserve (Fed) provides some support for the US dollar (USD). 

Elsewhere, consumer sentiment tumbled as inflation fears rose, according to the University of Michigan Survey on Friday. The initial reading of the Consumer Sentiment Index came in at 67.4 in May from 77.2 in April, weaker than the expectation of 76.0. The one-year inflation outlook jumped to 3.5%, while the five-year outlook rose to 3.1%. Both figures registered the highest level since November 2023. 

On the Aussie front, Australia’s Treasury said on Sunday that they projected that inflation could return to the Reserve Bank of Australia’s (RBA) target band before the end of 2024. In the December outlook, the officials projected CPI inflation to slow to 3.75% by mid-2024 and 2.75% by mid-2025, putting it back in the RBA target band.

• AUD/USD is consolidating after reversing its short-term trend and beginning a new uptrend. 
• A break above 0.6624 would confirm more upside for the pair. 
• AUD/USD may have formed a Measured Move with a final target at around 0.6690.

AUD/USD is trading in the 0.6610s on Friday after pulling back from resistance at the 0.6624 barrier. 

The pair is probably in a short-term uptrend, evidenced by the rising sequence of peaks and troughs since the April 19 lows, visible on the 4-hour chart 

AUD/USD 4-hour Chart

Given the old saying that “the trend is your friend” the resumption of the uptrend suggests AUD/USD will continue higher. 

A re-break above the 0.6624 highs would provide confirmation of further upside to the next target at the 0.6649 resistance level of the May 3 high. Following that, the next target would be at around 0.6680-90. 

The second target is generated by a possible Measured Move pattern that AUD/USD has formed since the April 19 lows. These patterns are like large zig-zags composed of three waves, labeled A, B and C on the chart. The general expectation is that wave C will be either the same length as A or a Fibonacci 0.681 of A. 

Wave C has already reached the Fibonacci 0.681 target of the Measured Move at the May 3 highs, however, there is a chance it could go all the way to the second target where C=A at 0.6690. 

The Moving Average Convergence Divergence (MACD) momentum indicator has crossed above its signal line, giving a buy signal. The MACD has also started printing green histogram bars, further adding to the weight of bullish evidence.

That said, it is still possible the correction from the May 3 highs may have further to run before the uptrend properly resumes. 

In the advent of more weakness, the rectangular pale green zone drawn on the chart just above the lower trendline is likely to provide a cushion of support for price. From there price will probably resume its uptrend. 

Alternatively, a decisive break below the trendline would be a bearish sign, suggesting a potential reversal of the trend. 

A decisive break would be one accompanied by a long red candle which closes near its low or three red candles in a row that break below the trendline.

• AUD/USD climbs over 0.60% as US unemployment claims hit 231K, exceeding expectations, weakening the dollar.
• Higher jobless claims contribute to falling US Treasury yields.
• RBA holds rates; Governor Bullock's comments open to future Cash Rate adjustments.

The Australian Dollar rallied against the US Dollar on Thursday, printed gains of more than 0.60%, due to the Greenback remained offered following a softer than expected US jobs report. The AUD/USD trades back above the 0.6600 threshold and gains 0.04% as Friday’s Asian session begins.

AUD/USD gains as softer US labor data and falling Treasury yields dampen Greenback’s appeal.

US economic data was the main reason behind the poor performance of the American Dollar. The US Bureau of Labor Statistics (BLS) revealed that people filling out forms for unemployment benefits exceeded estimates. Initial Jobless Claims for the week ending May 4 rose to 231K, exceeding the estimates of 210K, and showing an increase from the previous week's figure of 209K.

Following the data, US Treasury bond yields dropped, with the 10-year benchmark note rate down almost four basis points to 4.459%. The US Dollar Index (DXY), which measures the buck’s performance against a basket of six currencies, dropped 0.25% and is at 105.23 at the time of writing.

It should be said that the latest round of US jobs data revealed in May showed signs the labor market is cooling. According to ANZ Analysts, “The data follow further falls in job openings at the end of March and the April nonfarm payrolls showing the softest growth for seven months. Not too much can be read into one round of data, but the incoming data will be watched very closely for further evidence that US labour market momentum may be slowing.”

In the meantime, San Francisco Fed President Mary Daly commented that lowering inflation to the Fed’s target would be a bumpy ride. Daly noted that the last three months of data leave policymakers uncertain about the future of inflation.

On the Aussie’s front, the Reserve Bank of Australia (RBA) 's latest monetary policy decision to hold rates unchanged sponsored a leg-down in the AUD/USD despite “not ruling anything ir or our” regarding monetary policy. However, Thursday’s price action lifted the pair to a new three-day high at 0.6621.

RBA’s Governor Michele Bullock maintained a balanced tone at the press conference. Regarding rates, she mentioned that "we might have to raise, we might not," indicating the board's contemplation of rate hikes at this meeting.

AUD/USD Price Analysis: Technical outlook

From a daily chart perspective, the pair is neutral to upward biased, despite buyers reclaiming key resistance levels like the 0.6600 figure. Nevertheless, it remains shy of testing the latest cycle high seen at 0.6667, the March 8 high, which could exacerbate a rally toward 0.6700. Once cleared, the next resistance level would be the December 28 high at 0.6871.

On the other hand, if sellers push prices below the 100-day moving average (DMA) at 0.6577, subsequent losses are awaited. The next demand level would be the 50-DMA at 0.6535, followed by the 200-DMA at 0.6515.

• AUD/USD is probably resuming its short-term uptrend after completing a correction. 
• A break above 0.6624 would help confirm the bullish case. 
• AUD/USD may have formed a Measured Move with a final target at around 0.6690.

AUD/USD is trading in the 0.6590s on Thursday after finding support from the 50 Simple Moving Average (SMA) and mounting a recovery. 

The pair is probably resuming its short-term uptrend, evidenced by the rising sequence of peaks and troughs since the April 19 lows, visible on the 4-hour chart 

AUD/USD 4-hour Chart

Given the old trader’s adage that “the trend is your friend” the resumption of the uptrend suggests AUD/USD will continue higher. 

A break above the 0.6608 and then the 0.6624 highs would provide more confirmation that the uptrend was resuming. The next upside targets for the uptrend lie at the 0.6649 resistance level of the May 3 high and then at a target at around 0.6680-90. 

The second target is generated by a possible Measured Move pattern that AUD/USD has formed since the April 19 lows. These patterns are like large zig-zags composed of three waves, labeled A, B and C on the chart. The general expectation is that wave C will be either the same length as A or a Fibonacci 0.681 of A. 

Wave C has already reached the Fibonacci 0.681 target of the Measured Move at the May 3 highs, however, there is a chance it could go all the way to the second target where C=A at 0.6690. 

The Moving Average Convergence Divergence (MACD) momentum indicator is painting red histogram bars indicating a negative bias. This suggests price might be vulnerable to more downside. It is possible the correction from the May 3 highs may have further to run before the uptrend properly resumes. 

The rectangular pale green zone drawn on the chart just above the lower trendline is likely to continue providing a cushion of support for price. From there price will probably resume its uptrend. A break below the trendline, however, would be a bearish sign, suggesting a potential reversal of the trend.

• AUD/USD drops 0.26%, pressured by higher US Treasury yields and risk aversion, contributing to a 0.70% two-day decline.
• RBA keeps rates steady; nuanced inflation comments lead to negative market reaction for AUD/USD.
• US Fed caution echoed by Boston Fed President Susan Collins, warning against premature rate cuts amid September cut expectations.

The Australian Dollar extended its losses against the US Dollar for the second straight day, as higher US Treasury bond yields underpinned the Greenback. On Wednesday, the AUD/USD lost 0.26% as market participants turned risk-averse ahead of the release of further US data during the rest of the week, followed by next week’s inflation report. As the Asian session begins, the pair trades at 0.6577, virtually unchanged.

AUD/USD dips amid rising US yields and cautious market sentiment ahead of key economic data releases.

The financial markets remain strictly focused on when the major central banks would ease policy. on Tuesday, the Reserve Bank of Australia (RBA) decided to keep rates unchanged, though slightly tweaked their statement, mentioning that inflation is indeed cooling. Despite adding that “the Board is not ruling anything in or out,” AUD/USD traders punished the Aussie Dollar, as it has lost close to 0.70% in the last two days.

RBA’s Governor Michele Bullock maintained a balanced tone at the press conference. Regarding rates, she mentioned that "we might have to raise, we might not," indicating the board's contemplation of rate hikes at this meeting.

On the US front, Federal Reserve officials continued to cross the newswires. Boston Fed President Susan Collins stated that she expects demand to slow down to bring inflation to the Fed’s 2% goal. She added that there are risks of cutting rates “too soon” and mentioned that the current policy is well-positioned and that it is “moderately restrictive.”

Regarding interest rate expectations, the swaps market has largely discounted any further RBA rate hikes over the next six months, with a decrease priced in for the subsequent six months.

On the US front. the CME FedWatch Tool shows that odds for a quarter-percentage-point cut in September by the Fed increased from 55% last week to 85% as of writing.

AUD/USD Price Analysis: Technical outlook

From a daily chart perspective, the pair is neutral to upward biased, though buyers need to surpass the latest cycle high seen at 0.6667 the March 8 high, which could exacerbate a rally toward 0.6700. Once cleared, the next resistance level would be the December 28 high at 0.6871. On the other hand, if sellers push prices below the 100-day moving average (DMA) at 0.6577, subsequent losses are awaited. The next demand level would be the 50-DMA at 0.6535, followed by the 200-DMA at 0.6515.

• AUD/USD hits hard due to US Dollar’s recovery and dismal market sentiment.
• Fed Kashkari sees interest rates remaining steady by the year-end.
• RBA Bullock doesn’t see the need to hike interest rates again.

The AUD/USD pair witnesses an intense sell-off and falls to 0.6560 in Wednesday’s early American session due to multiple headwinds. A sharp recovery in the US Dollar and weakness in the Australian Dollar due to less-hawkish interest rate guidance from the Reserve Bank of Australia (RBA) after keeping them unchanged at 4.35% have weighed on the Aussie asset.

The market sentiment turns downbeat as investors remain uncertain over the Federal Reserve’s (Fed) rate-cut timing. The S&P 500 opens on a negative note, exhibiting a decline in investors’ risk appetite. 10-year US Treasury yields recovered to 4.48% after Minneapolis Federal Reserve (Fed) Bank President Neel Kashkari raised concerns over stalled progress in the disinflation process as it favours interest rates remaining at their current levels for the entire year.

The US Dollar Index (DXY) advances to 105.50 as Neel Kashkari said he wants to see multiple positive inflation readings to build confidence that inflation is progressively declining to the 2% target. He added that weakness in the job market could justify the need for a rate cut.

Due to the absence of top-tier United States economic data, investors will focus on speeches from policymakers: Fed Vice Chair Philip Jefferson, President of the Federal Reserve Bank of Boston Susan Collins and Fed Governor Lisa Cook to project the next move in the US Dollar.

Meanwhile, the Australian Dollar remains under pressure after the RBA’s less-hawkish commentary on the interest rate outlook. In the press conference, RBA Governor Michele Bullock ruled out expectations of more rate hikes despite recent price pressures exceeding expectations. Bullock said, “I don't think we necessarily have to tighten again.” He added, “We believe rates are at the right level to get inflation back to target.”

• AUD/USD drops 0.42% after RBA holds cash rate at 4.35%, adopting a dovish tone in its statement.
• Markets react quickly, adjusting to RBA's shift from a neutral to a slightly dovish stance due to slow cooling inflation.
• US Dollar gains strength after Minneapolis Fed President Kashkari suggests possible rate hikes if inflation persists.

The Australian Dollar registered losses of around 0.42% against the US Dollar on Tuesday, following the Reserve Bank of Australia’s (RBA) monetary policy decision to keep rates unchanged. However, it was perceived as a dovish decision. Therefore, the AUD/USD finished the session near the day's lows, and as Wednesday's Asian session began, it traded at 0.6591, down 0.09%.

AUD/USD falls beneath 0.6600 amid Reserve Bank of Australia's cautious stance on inflation

Wall Street finished the session mixed, while the Greenback ended on a higher note despite the fall of US Treasury yields.

The main driver for AUD/USD traders was the RBA’s decision to keep the Cash Rate at 4.35%. Their monetary policy statement was tweaked from March, acknowledging that inflation is easing at a slower pace than expected, while March’s statement mentioned that inflation was cooling but remained high. That was perceived as dovish by the markets, who quickly priced in the RBA’s tilting neutral to slightly dovish.

On the US front, the narrative revolves around when the Federal Reserve will cut interest rates. Following the Federal Open Market Committee's (FOMC) decision to hold rates, the US Central Bank mentioned that risks to achieving its dual mandate on employment and inflation “moved toward better balance over the past year,” indicating that sudden weakness in the labor market could open the door to lowering rates.

The lack of data releases keeps traders leaning on speeches by Fed officials. Minneapolis Fed President Neel Kashkari bolstered the Greenback after saying that the Fed might stand put on interest rates and opened the door to raising the federal funds rate if inflation doesn’t resume its downtrend.

In the meantime, the CME FedWatch Tool shows that odds for a quarter-percentage-point cut in September by the Fed increased from 55% last week to 85% as of writing.

AUD/USD Price Analysis: Technical outlook

From a daily chart perspective, the pair is neutral to upward biased, though buyers need to surpass the latest cycle high seen at 0.6667 the March 8 high, which could exacerbate a rally toward 0.6700. Once cleared, the next resistance level would be the December 28 high at 0.6871. On the other hand, if sellers push prices below the 100-day moving average (DMA) at 0.6577, subsequent losses are awaited. The next demand level would be the 50-DMA at 0.6535, followed by the 200-DMA at 0.6515.

• AUD/USD is correcting back within a short-term uptrend. 
• It will probably eventually find support and resume its bullish bias. 
• The pair may have formed a Measured Move with a target for ending wave at 0.6680.

AUD/USD is trading in the 0.6590s on Tuesday as it continues correcting back from its May 3 high above 0.6600. 

The pull back is probably only a temporary correction. The rising sequence of peaks and troughs on the 4-hour chart suggest the pair is in a short-term uptrend, which given the old adage that “the trend is your friend”, is biased to eventually continue higher. 

AUD/USD 4-hour Chart

The Moving Average Convergence Divergence (MACD) momentum indicator has crossed below its signal line indicating AUD/USD will probably continue lower for a bit longer. 

The correction could unfold down to support in the rectangular pale green zone drawn on the chart just above the lower trendline. From there price will probably resume its uptrend. A break below the trendline, would be a bearish sign, suggesting a potential reversal. 

If the uptrend resumes it will probably rise back up to the 0.6649 resistance level of the May 3 high, then a target at around 0.6680. 

AUD/USD has probably formed a Measured Move price pattern since the April 19 lows. These patterns are like large zig-zags composed of three waves. These are labeled A, B and C on the chart. The general expectation is that wave C will be either the same length as A or a Fibonacci 0.681 of A. 

Wave C has already reached the Fibonacci 0.681 target of the Measured Move at the May 3 highs, however, there is a chance it could go all the way to the second target where C=A at 0.6680. 

• AUD/USD steady at 0.6624; focus on upcoming RBA decision, quiet US data, and UK bank holiday.
• Wall Street ends higher, driven by optimism over potential Fed rate cuts.
• ANZ analysts anticipate RBA will hold rates, possibly adopting a hawkish stance due to inflation trends.

The Australian Dollar registered minuscule gains compared to the US Dollar as traders braced for the Reserve Bank of Australia (RBA) monetary policy meeting. A scarce economic docket in the United States (US) and a bank holiday in the UK were the main drivers behind the “anemic” AUD/USD price action. At the time of writing, the pair trades at 0.6624, virtually unchanged.

Australian Dollar sees limited movement as markets anticipate key RBA monetary policy

Wall Street finished the session with gains amid an upbeat market mood due to investors' confidence that the Federal Reserve would begin to lower rates faster than expected. Meanwhile, on Tuesday, AUD/USD traders brace for the RBA’s monetary policy decision.

The RBA is expected to keep the cash rate unchanged at 4.35%, though there is speculation that the central bank might shift slightly hawkish following higher-than-expected inflation figures for Q1 2024. Analysts at ANZ Bank commented that they expect the RBA to tilt hawkishly in its post-meeting statement.

They added the RBA’s board might choose a form a word, such as “the risks of inflation not returning to the target in a reasonable timeframe has risen,” followed by “accordingly the Board is not ruling anything in our out.”

On the US front, Federal Reserve officials crossed the newswires. President of the Federal Reserve Bank of Richmond, Thomas Barkin expressed that he anticipates high interest rates will further slow the economy and help bring inflation down to the 2% target. Meanwhile, John Williams, the New York Fed President, mentioned that rate cuts are on the horizon, but the timing will be based on a comprehensive review of the data.

• AUD/USD trades higher on Monday after US data last week surprised to the downside, weighing on USD. 
• The RBA could adopt a hawkish tone at their meeting on Tuesday, supporting the AUD. 
• AUD/USD is in a short-term uptrend with the bias favoring long holders. 

AUD/USD trades higher on Monday, up by a quarter of a percent in the 0.6620s, propelled mainly by a depreciation of the US Dollar (USD) after the release of weaker-than-expected US data at the end of last week. 

On Friday, data from the US Bureau of Labor Statistics (BLS) showed US Nonfarm Payrolls in April undershot expectations, Average Hourly Earnings dipped below forecast and the Unemployment Rate ratcheted up a notch. 

Additionally, data from S&P Global showed US Services PMI fell in contraction territory. Given Services wage inflation has been a primary concern of the Fed the decline is significant. Overall the data suggests the economy is cooling and the Federal Reserve (Fed) will be much more likely to cut interest rates before the end of the year. This is negative for USD since lower interest rates attract less foreign capital inflows. 

The Australian Dollar (AUD), meanwhile, stays firm on expectations the Reserve Bank of Australia (RBA) will keep interest rates unchanged at their meeting on Tuesday and possibly even adopt a more hawkish tone, on the back of continued stubbornly-high inflation data. Recent data showed Inflation in Q1 in Australia surprised to the upside, reinforcing the notion that of all the G10 central banks, the RBA is likely to be the last one to cut interest rates. 

There is even a possibility the RBA could surprise markets with a interest-rate hike, according to some analysts. 

“Cash rate futures are still pricing in around a 40% chance of another rate hike from the RBA. However, cash rate futures are yet to trade following the market moves in the US,” said analysts at Westpac in a note on Monday. 

In such a scenario, the Australian Dollar would surge with AUD/USD extending its short-term uptrend higher, probably surpassing the 0.6686 March high and touching 0.6700. 

• AUD/USD holds positive ground near 0.6610 in Monday’s early Asian session.
• The US Nonfarm Payrolls (NFP) came in weaker than expected in April, along with lower-than-expected wage growth.
• The RBA is expected to hold the cash rate at 4.35% for a fourth straight meeting on Tuesday while reinstating a hawkish bias.

The AUD/USD pair extends its upside around 0.6610 during the early Asian session on Monday. The downbeat US employment data for April has exerted some selling pressure on the US Dollar (USD) across the board. Investors will closely monitor the Reserve Bank of Australia (RBA) interest rate decision on Tuesday.

The employment market in the United States slowed more than expected in April and the annual wages fell below 4.0% for the first time in nearly three years, the US Bureau of Labor Statistics (BLS) reported on Friday. The US Nonfarm Payrolls (NFP) rose 175,000 in April from the 315,000 increase (revised from 303,000) in March, below the market estimation of 243,000. The Unemployment Rate climbed to 3.9% in April from 3.8%, while the Average Hourly Earnings dropped to 3.9% YoY in April from the previous reading of 4.1%.

Investors increased their bets that the Federal Reserve (Fed) will start counting the interest rate in September and expect the Fed to lower its borrowing costs twice this year instead of only once before the data was released. This, in turn, weighs on the Greenback and acts as a tailwind for the AUD/USD pair.

On the Aussie front, the RBA is likely to keep its key interest rate at a 12-year high of 4.35% on Tuesday as inflation in Australia remains stubbornly high. Market players will take more cues from the RBA press conference after the monetary policy meeting. If the RBA’s Governor Michele Bullock delivers a hawkish remark, this might boost the Australian Dollar (AUD) against the USD. Analysts from Commonwealth Bank and Westpac anticipate the interest rate to peak at 4.35% in November 2023, then drop to 3.10% by December 2025.

• Australian Dollar appreciates against USD, driven by positive sentiment and strong US economic data.
• US Dollar Index falls 0.27% after Fed keeps rates steady and signals slower Quantitative Tightening.
• Chair Powell stresses data-dependent policy amid slow inflation progress.
• Australia's Judo Bank Services PMI disappoints investors, coming at 53.6, down from 54.2, missing estimates.
• AUD/USD traders await US labor data, including Nonfarm Payrolls and Unemployment Rates.

The Australian Dollar registered solid gains of 0.65% against the US Dollar on Thursday, courtesy of an upbeat market mood amid solid economic data from the United States (US). However, the Federal Reserve’s (Fed) latest monetary policy decision is still weighing on the Greenback, which finished the session losing 0.27%, as depicted by the US Dollar Index (DXY). The AUD/USD trades at 0.6567, up by a minuscule 0.03%.

AUD/USD slightly up as traders digest Federal Reserve decision and Powell comments

On Wednesday, the Fed decided to hold rates unchanged and opened the door to reducing the Quantitative Tightening (QT) pace. Additionally, the Fed Chair said that it’s not appropriate to reduce interest rates as inflation progresses stalled. He emphasized the data-dependent stance, saying they would decide monetary policy “meeting by meeting.”

Data-wise, the US Balance of Trade reported the deficit narrowed -0.1% from $-69.5 billion to $-69.4 billion, falling shy of the expected $-69.1 billion. Other data showed that Factory orders improved from 1.2% to 1.6% MoM in March as projected, while Americans filling for unemployment benefits for the last week rose by 208K, less than the 21K expected, unchanged from the previous reading.

In the meantime, AUD/USD traders are looking for the release of the Judo Bank Services PMI Final reading for April, which is expected to drop from 54.4 to 54.2. On the US front, April’s US Nonfarm Payrolls are expected to rise 240K vs. 303K in March. The Unemployment Rate is estimated to stay at 3.8%, while Average Hourly Earnings would likely remain unchanged at 0.3% MoM.

AUD/USD Price Analysis: Technical outlook

The AUD/USD daily chart suggests the pair is neutrally biased, as price action meanders around flat 50, 200, and 100-day moving averages (DMAs). However, if buyers lift the pair above the 100-DMA at 0.6580, it will clear the path toward 0.6600. Further upside is seen once broken, with the next supply zone seen at March 8 high at 0.6667. Conversely, a drop below the confluence of the 200 and 50-DMAs at around 0.6520 could pave the way to challenge the current week's low of 0.6465.

• AUD/USD clings to gains above 0.6500 as the US Dollar struggles to recover the Fed’s policy-generated losses.
• The Fed remains hopeful for rate cuts despite progress in disinflation has stalled.
• Stubborn Australian inflation fuels prospects of RBA delaying rate cuts.

The AUD/USD pair holds gains above the psychological support of 0.6500 in Thursday’s early New York session. The Aussie asset strengthens as the US Dollar struggles to recover losses inspired by the Federal Reserve’s (Fed) less hawkish guidance on interest rates.

The US Dollar Index (DXY) turns sideways after declining to near the crucial support of 105.50. The indication from the Fed’s monetary policy statement and Chair Jerome Powell’s press conference that the central bank leaned towards eventual rate cuts this year despite no progress in inflation declining to the 2% target in the first quarter of this year, weighed on the US Dollar. While the market sentiment has turned positive, exhibited by the positive opening of the S&P 500.

10-year US Treasury yields rise to 6.4% on firm expectations that the Fed would be laggard in pivoting to interest rate cuts in comparison with other central banks from Group of Seven (G7) nations, which have faced high inflation issues.

Meanwhile, the Australian dollar has registered decent gains as a slower-than-expected decline in price pressures in the first quarter of this year has fuelled expectations for the Reserve Bank of Australia to keep key borrowing rates on a restrictive trajectory for a longer period. On an annual basis, the Q1 Australia inflation rose by 3.6% against the consensus of 3.4%. Amid persistent inflation fears, the RBA is expected to deliver hawkish guidance on interest rates on May 7.

Going forward, investors will focus on the US Nonfarm Payrolls (NFP) data for April, which will be published on Friday. US employers are anticipated to have recruited 243K jobs, lower than the prior reading of 303K.

• AUD/USD gains ground near 0.6525 in Thursday’s early Asian session. 
• The Fed kept its benchmark rate in a targeted range between 5.25%-5.50%, as widely expected.
• The recent Australia’s March retail sales dampened speculation that the RBA’s next move in interest rates might be up.

The AUD/USD pair extends recovery around 0.6525 during the early Asian session on Thursday. The Federal Reserve (Fed) held its interest rates steady at 5.25–5.50% at its meeting on Wednesday, citing a “lack of further progress” in getting inflation back down to its 2% target. The Greenback edges lower after the monetary policy meeting on the Fed's cautious stance on its future trajectory.

The US Fed kept its benchmark short-term borrowing rate in a targeted range between 5.25%-5.50%, as widely expected. During the press conference, Fed Chair Powell emphasized the progress on inflation has stalled recently and it would take longer than previously thought before the Fed had the confidence that inflation would move toward its 2% target. Powell stated that if hiring stayed strong and “inflation is moving sideways,” that “would be a case in which it would be appropriate to hold off on rate cuts.” This, in turn, might boost the US Dollar (USD) and cap the upside of AUD/USD. 

Elsewhere, the US ISM Manufacturing PMI came in worse than estimated, falling to 49.2 in April from March's expansionary reading of 50.3. Meanwhile, ADP Employment Change showed an increase of 192,000 jobs in April from the upwardly revised March figure of 208,000, beating the 175,000 expected. Finally, the JOLTS Job Openings dropped to 8.488 million in March from 8.813 million in the previous reading, marking the lowest level of job openings reported. 

On the Aussie front, Australia’s March retail sales were weaker than expected, dropping by 0.4% MoM in March from the previous reading of a 0.3% rise. This data dampened recent speculation that the Reserve Bank of Australia's (RBA) next move in interest rates might be up.