AUD/USD ANALYSIS & TALKING POINTS
- AUD/USD down 1.10% thus far today.
- US core PCE to dominate headlines as USD rallies.
- Neckline in focus for bears.
AUSTRALIAN DOLLAR FUNDAMENTAL BACKDROP
The Australian dollar continues its depreciation against the US dollar this Friday morning as fundamental divergence between the two regions supplement the move. Yesterday’s robust US GDP & durable goods orders figures bolstered the greenback while this mornings miss on Australian retail sales data (see economic calendar below) extended the AUD selloff.
Later today, the US core PCE price index release will be at the center of everyone’s mind being the Fed’s preferred measure of inflation. With estimates expected to fall, this may negate any hawkishness from yesterday’s data as well as reducing stagflation concerns. Michigan consumer sentiment rounds off the trading week and may provide some assistance for the USD should actual data fall in line with forecasts.
AUD/USD ECONOMIC CALENDAR (GMT +02:00)
Source: DailyFX economic calendar
Money markets still expect another interest rate hike from the Reserve Bank of Australia (RBA) possibly in late 2023/mid 2024 but if Australian economic data maintains its current trajectory, there is room for a dovish repricing that may weigh negatively on the pro-growth currency.
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RBA INTEREST RATE PROBABILITIES
Source: Refinitiv
TECHNICAL ANALYSIS
Introduction to Technical Analysis
Candlestick Patterns
Recommended by Warren Venketas
AUD/USD DAILY CHART
Chart prepared by Warren Venketas, IG
Daily AUD/USD price action supports my prior analysis of a 0.6700 retest which has since played out dipping below both the 50-day (yellow) and 200-day (blue) moving averages respectively. Bears now look to set their sights on the 0.6596 swing low/0.6600 psychological handle coinciding with the double top (blue) neckline.
Key resistance levels:
- 0.6772
- 200-day MA
- 0.6700/50-day MA
Key support levels:
- 0.6596
- 0.6565
- 0.6500
IG CLIENT SENTIMENT DATA: BEARISH
IGCS shows retail traders are currently net LONG on AUD/USD, with 76% of traders currently holding long positions. At DailyFX we typically take a contrarian view to crowd sentiment resulting in a short-term downside disposition.
Contact and followWarrenon Twitter:@WVenketas
