News

Oct 11, 2023

AUD to USD Forecast: Sub

On Thursday, the AUD/USD gained 0.18% to end the day at $0.65502. Australian trade data and service sector PMI numbers from China provided much-needed support. The RBA Monetary Policy Statement will

On Thursday, the AUD/USD gained 0.18% to end the day at $0.65502. Australian trade data and service sector PMI numbers from China provided much-needed support.

The RBA Monetary Policy Statement will draw interest this morning. On Tuesday, the RBA surprised the markets by holding the cash rate unchanged at 4.10%. The Statement should guide investors on what to expect in the coming months. Weakening macroeconomic conditions suggest the RBA may need to leave the brakes on.

It is a busy US session, with the US Jobs Report to draw interest. A pickup in wage growth and a steady US unemployment rate would refuel bets on a September Fed rate hike. Economists forecast average hourly earnings to slow from 4.4% to 4.2 and the unemployment rate to hold steady at 3.6%.

The US labor market forms part of the Fed’s dual mandate. The FOMC Committee forecasts the longer-run normal rate of unemployment to be 4.1%. The US unemployment rate fell from 3.7% to 3.6% in June. Tighter labor market conditions would lead to higher wage growth levels and a demand-driven inflation pickup. Higher borrowing costs would curb hiring and wage growth.

The Daily Chart showed the AUD/USD hover above the $0.6545 – $0.6526 support band. However, despite the bullish session, the Aussie remained below the 50-day ($0.66958) and 200-day ($0.67425) EMAs, sending bearish near and longer-term price signals.

The 50-day EMA fell further from the 200-day EMA, sending bearish price signals.

Looking at the 14-Daily RSI, the 38.26 reading signals a bearish trend and supports a fall through the 0.6545 – 0.6526 support band to target sub-$0.65. However, an AUD/USD move through the $0.6620 – $0.6600 resistance band (previously the support band) would give the bulls a run at the $0.6680 – $0.6700 resistance band and the 50-day EMA ($0.66958).

Looking at the 4-Hourly Chart, the AUD/USD sits above the $0.6545 – $0.6526 support band. However, the AUD/USD remains below the 50-day ($0.66484) and 200-day ($0.67022) EMAs, sending bearish near and longer-term price signals.

Significantly, the 50-day EMA pulled back from the 200-day EMA, supporting a fall through the $0.6545 – $0.6526 support band. However, an AUD/USD move through the $0.6620 – $0.6600 resistance band (previously the support band) would give the bulls a run at the 50-day EMA ($0.66484).

Looking at the 14-4H RSI, the 37.27 reading reflects the bearish trend, with selling pressure outweighing buying pressure. The RSI aligns with the EMAs, signaling a fall through the $0.6545 – $0.6526 support band.