Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

AUD/USD Still Elevated On USD Weakness

Published 15/02/2018, 21:25
Updated 18/05/2020, 13:00

Early next week features some key releases from Australia, including the minutes from the last Reserve Bank of Australia (RBA) monetary policy meeting in early February, and the quarterly Wage Price Index.

On February 6th, the RBA left interest rates unchanged as widely expected, marking a full year-and-a-half without any rate changes. The central bank is not expected to raise interest rates until either late this year at the earliest, or possibly next year. The RBA’s recurring concerns about a strong Australian dollar is one of the factors precluding a more immediate rate hike.

Meanwhile, the US Federal Reserve is widely expected to raise interest rates again at its next meeting in March. This may especially be the case since US indicators have recently shown a greater-than-expected increase in inflation, and US government bond yields have remained elevated near new multi-year highs. This monetary policy divergence between the RBA and Fed is potentially a pressuring factor for AUD/USD, though expectations of higher US interest rates have thus far been unable to provide any meaningful boost for the heavily oversold US dollar.

From a technical perspective, AUD/USD has been on the rebound for the past week – mostly due to resumed weakness in the US dollar – after the currency pair dropped precipitously during the first week of February. That drop brought AUD/USD down to approach a key support target around the 0.7750 level before the current rebound. Amid the noted Australian releases early next week, any resumption of weakness in the Australian dollar and/or relief rebound for the beleaguered US dollar, could have the potential to pressure AUD/USD back down towards that 0.7750-area target. Any extended breakdown below 0.7750 would be a key technical event that could lead to significantly further losses for the currency pair.
AUS/USD Daily Chart

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Original Post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.