AUD/USD Keeps Strong as Investors Monitor US Jobless Claims

AUD/USD holds firm amid rate cut expectations and US jobless claims, eyes critical data for continued resilience in 2024.

Amid global market dynamics, the Australian dollar (AUD) maintains its robust performance, driven by the Federal Reserve’s growing expectations of interest rate cuts and a weakening US dollar. Anticipating rate cuts by the Reserve Bank of Australia (RBA) around May/June 2024, the upward momentum of the AUD relies on incoming data to guide the timing and extent of this dovish pivot.

China, a significant trade partner with Australia, adds a layer of anticipation as the National Bureau of Statistics (NBS) prepares to release its manufacturing and non-manufacturing Purchasing Managers’ Index (PMI) report on December 31, marking a crucial data point for the conclusion of 2023. With China implementing stimulus measures to counter sluggish economic growth post-COVID, any positive surprises in the NBS data could set a solid foundation for the Aussie dollar in the new year.

AUD/USD Keeps Strong as Investors Monitor US Jobless Claims

The spotlight today falls on US economic data, particularly initial jobless claims, a metric that has proven to be resilient. The strength of the US labor market remains a focal point, especially in light of decreasing inflation. As we approach the first week of 2024, the upcoming NFP report stands poised to shape market sentiment actively.

The AUD/USD pair remains overbought territory on the Relative Strength Index (RSI), with attention drawn to the psychological resistance level of 0.6900. The ongoing battle around the long-term trendline resistance, which has held firm since February 2021, adds intrigue. A successful breach of this zone may open doors for the pair to reach 0.7000. Advisors recommend traders monitor the looming golden cross in the respective moving averages for potential bullish support.

IG Client Sentiment Data indicates a bullish stance among retail traders, with 60% currently holding short positions on AUD/USD. Weekly data suggests a notable change in sentiment, with a decrease in long positions and an increase in shorts.

Investors closely monitor the AUD/USD pair amid challenges and opportunities, including monetary policy expectations, economic data, and technical levels. These key developments provide cues for the currency’s trajectory into the new year. The interplay between global economic forces and market sentiment will likely shape the Australian dollar’s journey in the coming weeks.

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