The Australian Dollar continues to decline, erasing recent gains as the US Dollar gains strength
FUNDAMENTAL OVERVIEW:
- The Australian Dollar reversed its intraday gains despite strong economic data from China published on Friday.
- China’s GDP expanded by 5.4% year-over-year in Q4 2024, up from 4.6% growth in Q3.
- Meanwhile, US Retail Sales rose by 0.4% month-over-month in December, falling short of the anticipated 0.6% increase.
The Australian Dollar (AUD) surrenders its daily gains against the US Dollar (USD) on Friday, despite finding support earlier from strong economic data out of China. China’s Gross Domestic Product (GDP) expanded by 5.4% year-over-year in Q4 2024, surpassing market expectations of 5% and improving from the 4.6% growth recorded in Q3.
Quarter-over-quarter, China’s GDP grew by 1.6% in Q4, in line with forecasts and up from the 0.9% growth in the previous quarter. Additionally, China’s annual Retail Sales for December rose by 3.7%, exceeding the anticipated 3.5% and the prior figure of 3.0%. Industrial Production also outperformed expectations, climbing 6.2% compared to the forecasted 5.4% and November’s 5.4%.
During a Friday press conference, the National Bureau of Statistics (NBS) provided its economic outlook, emphasizing that the economy continues to face notable difficulties and challenges. The bureau pointed out that the effects of shifts in the global environment are growing more pronounced, while domestic demand remains inadequate.
In Australia, the seasonally adjusted unemployment rate edged up to 4.0% in December from 3.9% in November, in line with market expectations. Meanwhile, employment surged by 56.3K in December, a sharp increase from the revised 28.2K in November (previously reported as 35.6K), significantly surpassing the projected gain of 15.0K.
AUD/USD TECHNICAL ANALYSIS CHART:
Technical Overview:
AUD/USD is trading within a down channel.
AUD/USD is moving below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in a Neutral Zone, while the Stochastic oscillator suggests a Negative trend.
Immediate Resistance level: 0.6204
Immediate support level: 0.6158
HOW TO TRADE AUD/USD
The AUD/USD pair, after a prolonged downtrend, paused its decline and established temporary support, leading to a period of range-bound consolidation. Although the pair initially attempted an upward move, it lacked sustained momentum, resulting in a sharp reversal. The price subsequently broke through a critical support zone and is currently trading below it. If the downward pressure persists, AUD/USD may continue its decline until it reaches the next support level.