AUD/USD Slides to 0.6525 Area on Renewed Selling Pressure
Key Points
- AUD/USD pair faces renewed selling pressure, eroding overnight gains.
- Reduced Fed rate cut expectations and geopolitical tensions support the US dollar.
- Chinese trade data and US consumer sentiment index in focus for further market direction.
Market Overview
The AUD/USD currency pair plunged on Friday's Asian session, eroding a portion of its previous intraday rise. Spot prices hovered around the 0.6530-0.6525 zone. The decline was attributed to mixed fundamental signals.
Factors Driving the Downward Pressure
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Reduced Fed Rate Cut Bets: Data indicating higher-than-expected US consumer inflation has prompted investors to postpone their bets on the timing of the first interest rate cut by the Federal Reserve (Fed). The initial expectation was for a cut in June, which has now been pushed back to September.
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Geopolitical Tensions: Ongoing geopolitical uncertainties, including tensions between the US and China, continue to bolster the demand for the safe-haven US dollar.
Supportive Factors
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Chinese Premier Visit: The South China Morning Post reported that Chinese Premier Li Qiang will visit Australia in June. This news is seen as a sign of improving relations between the two countries, potentially supporting the Australian dollar.
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Strong Australian Economic Data: The recent release of strong Australian economic data, including positive employment numbers, has provided some support to the AUD.
Market Outlook
Market participants are eagerly awaiting the release of Chinese trade balance data, which can influence the Chinese currency Yuan and, by extension, the Australian dollar. Other key data points to watch include the Preliminary Michigan Consumer Sentiment Index and speeches by influential Federal Open Market Committee (FOMC) members.
Technical Analysis
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Short-Term: The AUD/USD pair is trading below its 20-day moving average (SMA), indicating a downward trend.
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Medium-Term: The daily SMA200 and the weekly pivot point S1 at 0.6509 act as potential support levels.
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Long-Term: The monthly SMA100 at 0.6603 remains a significant resistance level that the pair needs to break above to regain momentum.
Table: Key Levels and Indicators
| Indicator | Value |
|---|---|
| Todays Last Price | 0.6526 |
| Todays Daily Change | -0.0012 |
| Todays Daily Change % | -0.18 |
| Previous Daily High | 0.6553 |
| Previous Daily Low | 0.6502 |
| Previous Weekly High | 0.6619 |
| Previous Weekly Low | 0.6481 |
| Previous Monthly High | 0.6667 |
| Previous Monthly Low | 0.6478 |
| Daily Fibonacci 38.2% | 0.6534 |
| Daily Fibonacci 61.8% | 0.6521 |
| Daily SMA20 | 0.6549 |
| Daily SMA50 | 0.6544 |
| Daily SMA100 | 0.6603 |
| Daily SMA200 | 0.6544 |
| Daily Pivot Point S1 | 0.6509 |
| Daily Pivot Point S2 | 0.648 |
| Daily Pivot Point S3 | 0.6458 |
| Daily Pivot Point R1 | 0.656 |
| Daily Pivot Point R2 | 0.6582 |
| Daily Pivot Point R3 | 0.6611 |
Conclusion
The AUD/USD pair faces downward pressure amidst reduced Fed rate cut expectations and geopolitical uncertainties. However, positive economic data from Australia and the potential for improved relations with China provide some support. The release of Chinese trade data and other key economic indicators this week will play a crucial role in determining the pair's future direction.