AUD/USD ANALYSIS & TALKING POINTS
- Stellar Australian balance of trade data yet to translate through to AUD upside as global factors dominate market movement.
- US labor data under the spotlight later today.
- AUD/USD falling wedge could give bulls hope short-term.
AUSTRALIAN DOLLAR FUNDAMENTAL BACKDROP
The Australian dollar is stuck between two opposing forces with the Fed’s ‘pause’ narrative gaining traction and global recessionary fears limiting Aussie upside. Yesterday, the Fed expectedly increased rates by 25bps with a dovish slant after Fed Chair Jerome Powell stated “we feel like we are close, or maybe even there, fuddling market pricing with the implied fed funds futures now pointing to a total of 78bps of rate cuts by year end. That being said, the banking crisis is growing with PacWest the next in the firing line.
Concerns around economic growth and a looming recession are increasing which does not bode well for the AUD. Being a commodity linked currency, any pessimism towards growth generally weighs on the Aussie dollar.
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Earlier this morning, Australia’s trade balance figures surprised to the upside hitting a surplus of A$15.27 billion in March largely driven by iron ore and coal exports. While this is a positive for the local economy, external uncertainty is gripping financial markets leaving the AUD in limbo for now. Later today, focus will shift to the US once more and hone in on jobs data ahead of Friday’s Non-Farm Payroll (NFP) report to see whether jobless claims correlate with either the prior ADP employment change or JOLTs numbers.
ECONOMIC CALENDAR
Source: DailyFX economic calendar
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 shows the pair contained within a short-term falling wedge pattern (black) and could point to impending upside should AUD bulls break above wedge resistance. If the banking crisis can be repressed, investors may look to be more risk seeking leaving riskier currencies like the AUD in a favorable position.
Key resistance levels:
- 200-day MA (blue)
- 0.6700/Wedge resistance
- 50-day MA (yellow)
Key support levels:
- 0.6620
- 0.6565/Wedge support
IG CLIENT SENTIMENT DATA: BULLISH
IGCS shows retail traders are currently LONG on AUD/USD, with 68% of traders currently holding long positions. At DailyFX we typically take a contrarian view to crowd sentiment resulting but due to recent changes in long and short positioning, we arrive at a short-term bullish disposition.
Contact and followWarrenon Twitter:@WVenketas
