The AUD/USD has shown resilience, buoyed by strong Australian labor data and diminishing expectations of a Reserve Bank of Australia (RBA) rate cut this year. As the Australian Dollar gains traction, attention shifts to the upcoming Chinese GDP data, which could further influence market sentiment. This article provides an in-depth analysis of the technical outlook across multiple timeframes, along with key economic factors shaping the pair’s movement.
Key Takeaways:
- RBA Rate Cut Expectations: Strong Australian labor data has reduced the likelihood of RBA rate cuts in 2024.
- China GDP Data: The Chinese economy is expected to post 4.5% growth in Q3, potentially boosting Australian exports.
- US Retail Data Impact: Solid US Retail Sales figures have supported the US Dollar, though Treasury yields decline.
Technical Analysis:
Daily Chart Analysis:
- Trend: The AUD/USD pair is in a bearish structure, with lower highs and lower lows established since late August. The Break of Structure (BOS) below 0.6780 confirmed the downtrend.
- Support and Resistance: The 0.6650-0.6700 zone is a significant support area, with resistance around the 0.6800-0.6820 levels. A break below 0.6650 could expose the pair to further downside toward 0.6500.
- Indicators: The Relative Strength Index (RSI) is nearing oversold levels, suggesting a potential relief rally in the short term.
H4 Chart Analysis:
- Trend: The H4 chart highlights a bearish trend, with key supply zones noted at 0.6750 and 0.6820. Recent price action shows a consolidation phase around the 0.6700 level, hinting at a potential breakout.
- Key Levels: Immediate support lies at 0.6700, with resistance around 0.6750. If the pair breaks above 0.6750, it could target 0.6800.
- Indicators: The Moving Average Convergence Divergence (MACD) remains bearish, indicating potential continuation of the downside momentum.
H1 Chart Analysis:
- Trend: On the H1 chart, the pair has recently shown signs of a potential reversal, as evidenced by a Change of Character (CHoCH) and a minor Break of Structure. The price is attempting to break above the 0.6700 resistance.
- Support and Resistance: The 0.6650 level remains critical support, while resistance is seen at 0.6720. A clean break above 0.6720 could signal a short-term bullish reversal.
- Indicators: The RSI on the hourly chart has moved out of oversold territory, supporting a possible near-term recovery.
Economic Data:
The Australian Dollar has been bolstered by strong employment data, which showed an increase of 64.1K jobs in September, significantly exceeding the expected 25K. The unemployment rate held steady at 4.1%, reinforcing the view that the Australian labor market remains robust.
On the global front, attention turns to China, Australia’s largest trading partner. China’s GDP growth for Q3 is expected to come in at 4.5%, slightly below the previous 4.7% figure. This data will play a crucial role in shaping the AUD/USD pair’s future direction, as stronger-than-expected growth could provide additional support to the Australian Dollar.
Meanwhile, the US Dollar has found support from solid US Retail Sales data, which grew by 0.4% in September, exceeding expectations. This has fueled expectations of further nominal rate cuts by the Federal Reserve, as market participants weigh the strength of the US economy against inflationary pressures.
Trading Recommendations:
- Day Traders: Consider entering long positions if the pair breaks above the 0.6720 resistance level, targeting 0.6750 with a stop loss below 0.6690.
- Swing Traders: Monitor the 0.6650 support zone for potential buying opportunities. If the pair holds above this level, a move toward 0.6800 could be on the horizon. A break below 0.6650 would invalidate this setup, exposing further downside risks.
Conclusion:
The AUD/USD pair continues to be influenced by strong Australian data and shifting expectations around RBA and Federal Reserve rate cuts. As the pair navigates key technical levels, traders should remain vigilant for potential breakouts and the upcoming China GDP release, which could significantly impact the market’s direction.
