Quick Look:
- AUD/USD hits 2024 lows, finding support at 0.6443, with eyes on further drops.
- Central banks’ moves and economic policies in the US and China drive the currency trends.
- US retail sales and Chinese economic reports, including Q1 GDP, shape market sentiment.
- Bearish patterns dominate the pair, suggesting potential continued declines.
The Australian Dollar fell to its 2024 lows against the US Dollar on Tuesday, with traders eyeing key support levels amidst a flurry of economic events and policy updates from China and the United States. The AUD/USD pair found support at 0.6443, with the market setting its sights on a further drop to 0.6390 should the bearish momentum continue. However, potential bounce targets are identified at 0.6460, 0.6480, and 0.6500. Therefore offering a glimpse of recovery opportunities for the currency pair.
PBOC Moves, US Data Drives Bearish Trend
The People’s Bank of China’s (PBOC) daily USD/CNY fix heavily influenced this week’s market dynamics. This move underscored broader regional impacts on the AUD/USD performance. Moreover, the Chinese government’s commitment to bolstering capital markets has injected optimism, although the AUD/USD’s path has been predominantly bearish.
US, China Data Set Tone for AUD/USD Future
Geopolitical developments over the weekend and vital US and Chinese economic data releases have played pivotal roles. The US retail sales figures and a comprehensive set of Chinese economic indicators, including Q1 GDP, industrial production, and retail sales, have provided traders with much to consider. A financial expert remarked that traders anticipate economic results to align closely with the government’s GDP projections. Moreover, they are suggesting that predictability could mitigate market responses.
Bearish Patterns Hint AUD/USD Downside Risks
The anticipations surrounding the US housing market data add to the complexity, which could influence inflation expectations. Consequently, this can affect the Federal Reserve’s interest rate trajectory. Speculations are also rife about potential fiscal stimuli from China if its GDP growth falls below 5%, which could shift market dynamics in favour of the AUD.
Meanwhile, the technical perspective suggests a cautious approach, with the AUD/USD demonstrating a bearish engulfing candle on the weekly chart, highlighting potential downside risks. The currency pair remains a candidate for selling on rallies, a strategy that might dominate trading floors in the coming days.
AUD/USD: Eyes on FOMC, Mid-East Updates
Investors and traders continue to monitor updates closely, especially from Federal Open Market Committee (FOMC) members and ongoing developments in the Middle East. This can further sway the AUD/USD’s direction.
As the week progresses, market participants will watch for any policy or economic indicator shifts that might provide new trading catalysts or mitigate the current downward pressure on the Australian Dollar.
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