The Australian Dollar trims its intraday gains in response to a stronger US Dollar, with a focus on upcoming Consumer Sentiment data.
FUNDAMENTAL OVERVIEW:
- The Australian Dollar advanced as the domestic stock market improved following a tech rally on Wall Street.
- However, subdued employment data fuelled speculation about early interest rate cuts by the RBA.
- The US Dollar gained demand due to heightened tensions in the Red Sea, supporting risk aversion.
- Upbeat US housing and labor data played a role in diminishing the narrative of potential Fed rate cuts in March.
The Australian Dollar (AUD) pares back its intraday gains as the US Dollar (USD) maintains an upward trajectory on Friday. Earlier, the Australian Dollar gained momentum against the US Dollar, driven by a strengthened domestic stock market spurred by a tech rally on Wall Street, fuelled by robust US labor data. This surge instilled confidence in the market regarding the economy, leading investors to navigate uncertainties surrounding the Federal Reserve’s (Fed) interest rate trajectory.
Australia’s dollar faces a setback amid speculation about possible early interest rate cuts by the Reserve Bank of Australia (RBA). This perception gained momentum after an unforeseen decline in Employment Change data released on Thursday for December. Reinforcing this sentiment, a recent survey of 40 economists by “The Australian Financial Review” indicated that respondents expect the RBA to implement interest rate cuts as early as September.
Rising from the Middle East conflict, elevated tensions in the Red Sea are fostering a risk-averse atmosphere. Traders are turning to safe-haven assets, driving heightened demand for the US Dollar. Consequently, the AUD/USD pair is experiencing downward pressure. The situation intensified as the US-led military coalition carried out strikes on Houthi targets in Yemen in response to missile attacks by the Iran-backed Houthi group on maritime vessels earlier in the week.
AUD/USD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
AUD/USD is currently trading within a down channel.
AUD/USD is positioned below the 20&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Neutral zone, while the Stochastic oscillator suggests a Positive trend.
Immediate Resistance level: 0.6601
Immediate support level: 0.6537
HOW TO TRADE AUD/USD
After experiencing a notable price decline, AUD/USD has retraced and found support. Currently, it is attempting an upward movement and heading towards a significant resistance zone. An upward movement can be anticipated if this zone is breached to the upside.
TRADE SUGGESTION- Stop Buy– 0.6607, TAKE PROFIT AT- 0.6691, SL AT- 0.6555.