Category: Forex News

AUD to USD Forecast: Balancing RBA Hike Prospects and Fed Rate Cut Signals

Policy measures to bolster the Chinese economy could boost demand and improve trade terms with Australia. Significantly, measures to support the Chinese real estate sector could influence iron ore prices and buyer appetite for the Aussie dollar.

US Economic Calendar: Michigan Consumer Sentiment in Focus

On Friday, US consumer sentiment figures for March warrant investor attention. Economists forecast the Michigan Consumer Sentiment Index to remain steady at 76.9. An unexpected rise in the Consumer Sentiment Index could sink bets on an H1 2024 Fed rate cut.

A pickup in consumer sentiment could signal an upward trend in consumer spending, fueling demand-driven inflation. The Fed could delay the timing of an interest rate cut to reduce disposable income and curb consumer spending.

However, investors must also consider the sub-components. Consumer inflation expectations could also move dial.

Other stats include NY Empire State Manufacturing and US industrial production numbers. However, barring a slump in production, the consumer sentiment figures will likely have more influence.

Short-Term Forecast

Near-term AUD/USD trends will hinge on US consumer sentiment and stimulus measures from China. Better-than-expected numbers from the US could impact buyer demand for the AUD/USD. However, policy measures to bolster the Chinese economy could influence the RBA rate path. The RBA left a rate hike on the table in February while the Fed plans to cut interest rates.

AUD/USD Price Action

Daily Chart

The AUD/USD hovered below the 200-day EMA while remaining above the 50-day EMA. The EMAs sent bullish near-term but bearish longer-term price signals.

An Aussie dollar break above the 200-day EMA would support a move toward the $0.67003 resistance level.

Australian inflation expectations, stimulus measures from Beijing, and US consumer sentiment need consideration.

Conversely, an AUD/USD drop below the $0.65760 support level and the 50-day EMA would bring the $0.65500 handle into play. Buying pressure could intensify at the $0.65760 support level. The 50-day EMA is confluent with the support level.

Considering the RSI indicator, a 14-period Daily RSI reading of 52.30 indicates an AUD/USD move to the $0.67003 resistance level before entering overbought territory.

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