AUD/USD Forecast: Positive Momentum for the Australian Dollar

Positive momentum for the Australian Dollar as the Chinese outlook and upcoming RBA FOMC minutes influence AUD/USD.

ANALYSIS & KEY POINTS

• The upbeat Chinese outlook supports the Australian dollar.
• Focus on forthcoming RBA and FOMC minutes.
• Bullish sentiment targets the 200-day MA.

AUD/USD Forecast: Positive Momentum for the Australian Dollar

The Australian dollar gained momentum this Monday, benefiting from last week’s close above the psychological 0.6500 level. Investors are assessing global monetary policy, with recent weak US economic data causing a slip in US Treasury yields and USD weakness. In contrast, Australian jobs data remained robust, with steady unemployment and employment change surpassing expectations. Rising inflation expectations may pressure the Reserve Bank of Australia (RBA) to maintain a tight monetary policy, potentially leading to additional interest rate hikes. Market indicators suggest an openness to further tightening, emphasizing the significance of incoming data in guiding central bank strategy.

Adding to the positive outlook for the AUD, China maintained its Loan Prime Rate (LPR) stability following improved economic data. Previous stimulus measures yielded positive results, contributing to optimistic market sentiment. Commodity prices are upward due to a weaker dollar and positive emotions surrounding China’s economic performance, providing additional support to the growth-oriented Australian dollar. While the economic calendar for the remainder of the trading day appears relatively quiet, tomorrow’s events, including RBA speakers, RBA minutes, and FOMC minutes, are expected to introduce volatility to the currency pair.

TECHNICAL ANALYSIS

The daily price action for AUD/USD has convincingly broken above the 0.6500 level, heading towards the 200-day moving average. However, bearish/negative divergence persists in the Relative Strength Index (RSI), potentially indicating a peak around the resistance zone of the 200-day MA.

Key Resistance: 0.6596 (200-day MA)

Key Support Levels: 0.6500, 0.6459, 50-day MA, 0.6358

CLIENT SENTIMENT DATA: BULLISH (AUD/USD)

According to IG Client Sentiment (IGCS) data, retail traders are currently net LONG on AUD/USD, with 60% of traders holding long positions.

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