AUD/USD hovers near a two-month high, trading above the mid-0.6300s as markets await the FOMC minutes
FUNDAMENTAL OVERVIEW:
- AUD/USD gains fresh traction on Wednesday amid a mildly weaker USD, with the technical outlook favoring bulls and suggesting further upside potential.
- A dip below the 0.6335-0.6330 zone may present a buying opportunity.
The AUD/USD pair recovers positive momentum after the previous session’s slight pullback, maintaining its bullish bias through the first half of the European session amid a modest USD weakness. Additionally, the Reserve Bank of Australia’s (RBA) relatively hawkish stance helps stabilize spot prices near 0.6365, just below Monday’s highest level since December 17.
On a broader scale, AUD/USD has been trading within a narrow range since the start of the week. Considering its recent rebound from sub-0.6100 levels—the lowest since April 2020—this movement appears to be a bullish consolidation phase. Furthermore, positive oscillators on the daily chart indicate that the path of least resistance remains to the upside.
Australia’s Wage Price Index rose by 0.7% quarter-over-quarter in Q4 2024, missing the expected 0.8% increase and slowing from the previous quarter’s 0.9% gain. On an annual basis, wage growth eased to 3.2%, down from a revised 3.6%, marking the slowest pace since Q3 2022 and aligning with forecasts.
The Australian dollar came under additional pressure after the Reserve Bank of Australia (RBA) delivered its first rate cut in four years, lowering the Official Cash Rate (OCR) by 25 basis points to 4.10% on Tuesday.
Following the decision, RBA Governor Michele Bullock acknowledged the impact of high interest rates but cautioned against prematurely declaring victory over inflation. She also emphasized the resilience of the job market and clarified that further rate cuts are not guaranteed, despite market expectations.
AUD/USD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
AUD/USD is trading within a down channel.
AUD/USD is moving above 10&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 0.6374
Immediate support level: 0.6297
HOW TO TRADE AUD/USD
On the higher time frame, AUD/USD initially saw a sharp decline before stabilizing and forming a support zone, leading to a reversal to the upside. Currently, the pair has broken through a key resistance level and is trading above it. However, a pullback toward the support zone is underway. If the price holds above this level, it could resume its upward momentum and potentially test the 100-day EMA.
TRADE SUGGESTION- LIMIT BUY – 0.6321, TAKE PROFIT AT- 0.6383, SL AT- 0.6290.