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AUD/USD aims for continued recovery amid RBA meeting anticipation


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Recovering from a six-month low, AUD/USD's surge is buoyed by strong economic indicators and pre-FOMC speculations, with crucial RBA decisions and retail data looming.

 

original-size.webpSource: Getty

 

Written by: Tony Sycamore | Market Analyst, Australia
 
Publication date: 

Ten days ago, the AUD/USD dived below .6400c to its lowest level in over six months. However, after a remarkable five-day winning streak last week, the AUD/USD has started this week on the front foot, looking to extend its rebound above .6600c.

The AUD/USD's stunning recovery last week was partly due to position squaring, as traders locked in profits on long US dollar positions ahead of this week's FOMC meeting and US jobs data.

Also playing a strong hand, firmer than expected Australian CPI and PPI last week, coming hot on the heels of a robust labour force report, has resulted in the Australian interest rate market swinging from pricing in RBA rate cuts this year to a 50% chance of a hike before year-end.

While we aren't entirely on board with the idea of another RBA rate hike, we acknowledge the window for rate cuts in 2024 is closing; and push back our call for a first RBA rate cut from August until November. Additionally, next week's RBA Board Meeting may see the RBA reinstate its tightening bias. In the lead-up to next week's RBA meeting, we will receive retail sales data for March, building and home loan approvals, and private sector credit this week.

What is expected from March's retail sales report

Date: Tuesday, 30 April at 11.30am AEST

The main event on this week's local calendar is Tuesday's retail sales report for March. The market is looking for a rise of 0.3% MoM, unchanged from 0.3% in February. Given the RBA's focus is on inflation, another tepid retail sales number in March is unlikely to undo the market's current pricing of rate RBA rate hikes.

AU retail sales MoM chart

 

original-size.webpSource: TradingEconomics

AUD/USD technical analysis

On the weekly chart, the AUD/USD continues to move sideways within a contracting multi-month bearish triangle. Downtrend resistance from the January 2023 .7158 high is currently at .6765ish. Uptrend support from the October 2022 .6170 low is at .6340ish.

AUD/USD weekly chart

 

original-size.webpSource: TradingView

AUD/USD daily technical analysis

The AUD/USD started this week looking to extend its rebound towards a thick resistance layer between .6630 and .6670. Should the AUD/USD break above .6670, weekly downtrend resistance at .6765 would come into play.

On the downside, the AUD/USD has initial support from the 200-day moving average at .6525 and below that, a layer of support at .6480ish from swing lows in March and April, reinforced by the February .6442 low.

AUD/USD daily chart

 

original-size.webpSource: TradingView

  • Source TradingView. The figures stated are as of 29 April 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

 

 

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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