CFD Trading Rate Australian Dollar vs US Dollar (AUDUSD)

After a brief roller coaster ride, AUD/USD is now trading at the same level as at the end of November. Economists at Commerzbank analyze the pair’s outlook.

Cautious RBA provides support

Source: Commerzbank Research

• AUD/USD oscillates in a range on Monday and is influenced by a combination of diverging forces.
• Hopes for additional stimulus from China lends support to the Aussie amid subdued USD demand.
• The cautious market mood caps gains amid bets that the RBA will not hike interest rates further.

The AUD/USD pair lacks any firm intraday direction on the first day of a new week and seesaws between tepid gains/minor losses through the first half of the European session. Spot prices currently trade around the 0.6520-0.6525 area, unchanged for the day and remain well within the striking distance of a nearly three-week low touched last Thursday.

Traders opt to wait on the sidelines ahead of the Federal Reserve (Fed) Chair Jerome Powell's congressional testimony on Wednesday and Thursday, which might provide cues about the rate-cut path and influence the US Dollar (USD). Apart from this, important US macro data scheduled at the beginning of a new month, including the closely-watched Nonfarm Payrolls (NFP) on Friday, should provide a fresh directional impetus to the AUD/USD pair.

In the meantime, Friday's disappointing release of the US ISM Manufacturing PMI and the University of Michigan’s Consumer Sentiment Index, along with less-hawkish remarks by Fed officials, reaffirmed bets for a June rate cut. This keeps the USD bulls on the defensive and acts as a tailwind for the AUD/USD pair. Apart from this, hopes for additional stimulus measures from China turn out to be another factor lending some support to the Australian Dollar (AUD).

That said, a slight deterioration in the global risk sentiment – as depicted by a softer tone around the US equity futures – holds back traders from placing aggressive bullish bets around the risk-sensitive Aussie. Apart from this, growing acceptance that the Reserve Bank of Australia (RBA) will not hike rates further, bolstered by last week's rather unimpressive domestic inflation figures and weaker Retail Sales data, contributes to capping the upside for the AUD/USD pair.

Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom and positioning for any meaningful appreciating move. In the absence of any relevant US macro data on Monday, the US bond yields will play a key role in driving the USD demand. Apart from this, the broader risk sentiment should influence the USD price dynamics and produce short-term opportunities around the AUD/USD pair.

• AUD/USD weakens near 0.6525 despite the softer USD on Monday. 
• The US ISM Manufacturing PMI fell to 47.8 in February vs. 49.1 prior, weaker than expected.
• The recent Australian inflation data supported the case for the RBA to begin cutting interest rates later this year.

The AUD/USD pair trades on a weaker note below the mid-0.6500s during the early Asian session on Monday. The pair loses traction despite the lower US Dollar (USD) and US yields. Investors await the release of Australian Gross Domestic Product (GDP) for the fourth quarter ahead of US Nonfarm Payrolls (NFP). AUD/USD currently trades near 0.6525, down 0.08% on the day. 

On Friday, the US ISM Manufacturing PMI came in weaker-than-expected, falling to 47.8 in February from 49.1 in January. The New Orders Index declined to contractionary territory at 49.2, while the Production Index decreased to 48.4, and the Employment Index was at 45.9. Furthermore, the University of Michigan Consumer Sentiment Index eased to 76.9 from 79.6. 

Atlanta Fed President Raphael Bostic said that he expected that the first cut in rates would be appropriate, probably at the end of this year at the earliest, as the Fed's preferred inflation gauge was continuing to ease. The financial markets have priced in the 70% odds that the Federal Reserve (Fed) will start cutting interest rates at the June meeting. 

On the other hand, the Australian Consumer Price Index (CPI) rose 3.4% in January, below the market consensus of 3.5%.  Australian inflation supported the case for the Reserve Bank of Australia (RBA) to begin cutting interest rates later this year. Apart from this, the Chinese Caixin Services PMI on Tuesday might influence market risk sentiment. The weaker-than-expected data could drag the Chinese-proxy Australian Dollar (AUD) lower and act as a headwind for the AUD/USD pair. 

The Australian Building Permits is due on Monday, and the Judo Bank Composite PMI for February will be released on Tuesday. The highlight this week will be the Australian GDP growth numbers for Q4 and the US Nonfarm Payrolls (NFP). These events could give a clear direction to the AUD/USD pair.

• AUD/USD recovers vertically from 0.6490 as the US Dollar turns subdued.
• The market participants hope that the Fed will announce a rate cut in June.
• Upbeat Caixin Manufacturing PMI improves the appeal of the Australian Dollar.

The AUD/USD pair delivers a V-shape recovery from 0.6490 as investors hope the Federal Reserve (Fed) will start reducing interest rates from the June policy meeting. The Aussie asset recovers sharply as the US Dollar comes under pressure.

There is a mixed action in the global market as S&P 500 futures are down in the European session while risk-perceived currencies are performing better against the US Dollar. The US Dollar Index, which measures the US Dollar’s value against six rival currencies, falls slightly to 104.00.

Market expectations for rate cuts by the Fed in the June meeting remain firm as the annual core inflation data grew at the slowest pace of 2.8% in their years. However, the Federal Reserve (Fed) is still not ready to unwind the restrictive policy stance sooner as they need more confidence that inflation will return to the 2% target.

Fed policymakers want to analyze more data to confirm whether January’s high inflation data was a one-time blip or price pressures are flaring up again.

Going forward, market participants will look to the United States Manufacturing PMI data for February, which will be published at 15:00 GMT.

Meanwhile, the Australian Dollar performs stronger on February's upbeat Caixin Manufacturing PMI. Surprisingly, the economic data rose to 50.9 from expectations of 50.6 and the prior reading of 50.8. The Australian economy is China's leading trading partner, and an improvement in the latter's economic prospects eventually strengthens the Australian Dollar's appeal.

• AUD/USD hovers near week's low, with US inflation data briefly lifting the Aussie before a USD rebound.
• US Core PCE aligns with forecasts; unemployment claims rise, fueling speculation on June rate cut.
• Australian manufacturing PMI contraction raises concerns over post-pandemic economic recovery.

The AUD/USD registered back-to-back trading sessions with losses and remained within the lows of the week, just below the 0.6500 figure. US Inflation data initially boosted the Aussie, though the rally was short-lived, as the Greenback staged a comeback. The pair exchanges hands at 0.6490, virtually unchanged.

AUD/USD unchanged as US inflation data and Aussie PMI slowdown weighed on the AUD

Wall Street closed with gains, depicting an upbeat market sentiment. The Core Personal Consumption Expenditure (PCE) Price Index, the Federal Reserve’s preferred gauge for inflation, was aligned with estimates of 2.8% YoY, down from December 2.9%. The headline PCE continued its downward trend and rose by 2.4% YoY, down from 2.6% in the previous month.

Other data showed the Department of Labor announced unemployment claims for the week ending on February 17 jumped 215K above the consensus of 210K and the previous reading of 202K.

Following the data, Fed interest rates probabilities witnessed an increase in the odds of a 25 bps rate cut in the June meeting. A day ago, odds were at around 50%, and currently sit at 60.4%.

Recently, the Australia Judo Bank Manufacturing PMI for February came at 47.8, indicating that the business economy contracted, down from January’s 50.1 expansion. Warren Hogan, Chief Economist Advisor at Judo Bank, said “Australia's manufacturing sector is not growing, bringing into question the idea of a post-pandemic manufacturing revival. Over the past year, soft outcomes most likely reflect capacity constraints in Australia's construction sector (a major driver of domestic manufacturing) and the broader cyclical slowdown in the economy.”

What to watch?

Friday’s US economic docket will feature the release of the ISM Manufacturing PMI, the Consumer Sentiment of the University of Michigan, and Fed speakers.

• AUD/USD attracts some intraday sellers and slides back closer to a two-week low.
• Bets that the RBA will not hike rates and a softer risk tone undermine the Aussie.
• A modest USD weakness could help limit losses ahead of the US PCE Price Index.

The AUD/USD pair struggles to capitalize on its modest intraday recovery from a two-week low touched earlier this Thursday and slides back below the 0.6500 psychological mark during the first half of the European session.

Against the backdrop of Wednesday's rather unimpressive inflation figures, weaker-than-expected Australian Retail Sales data released this Thursday reaffirmed bets that the Reserve Bank of Australia (RBA) will not hike rates further. Apart from this, a turnaround in the global risk sentiment – as depicted by some follow-through weakness across the equity markets – turns out to be a key factor undermining the risk-sensitive Australian Dollar (AUD).

That said, a modest US Dollar (USD) weakness could offer some support to the AUD/USD pair and help limit any further slide ahead of the US Personal Consumption Expenditures (PCE) Price Index. The crucial inflation data could provide fresh cues about the Federal Reserve's (Fed) rate-cut path, which, in turn, will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the currency pair.

Thursday's US economic docket also features the usual Weekly Initial Jobless Claims, the Chicago PMI and Pending Home Sales. This, along with Fed speak, will drive the USD demand and produce short-term trading opportunities around the AUD/USD pair. Hence, it will be prudent to wait for strong follow-through selling before positioning for an extension of the recent rejection slide from a technically significant 200-day Simple Moving Average (SMA).

• AUD/USD falls 0.73% as RBNZ's cautious rate decision overshadows Australia's inflation report.
• US economic data reveals growth, with GDP at 3.2% YoY, influencing global market sentiment.
• Upcoming Australian Retail Sales expected to show recovery, with market forecasting a 1.5% rise MoM.

The Australian Dollar (AUD) dropped 0.73%, against the US Dollar (USD) on Wednesday/s session, courtesy of a dovish hold by the Reserve Bank of New Zealand (RBNZ), which followed a solid inflation report from Australia. As the Asian session begins, the AUD/USD trades at 0.6496, virtually unchanged.

AUD/USD retreats as investors weigh RBNZ's rate hold and anticipate Australian retail sales data

Wall Street finished with losses, as depicted by the S&P 500, down 0.30%. Economic data from the United States (US) showed the US economy is growing above the trend needed to drive inflation toward the US Federal Reserve's 2% target. the Gross Domestic Product (GDP) for the last quarter of 2023 grew by 3.2% YoY, below estimates of 3.3% and Q3 4.9%.

Besides that, Fed speakers stuck to their cautious stance, with Boston Fed President Susan Collins and New York Fed President John Williams supporting rate cuts later in the year. Collins noted that the road to achieving the inflation target would be “bumpy,” Williams said, “We still have a ways to go on the journey to sustained 2% inflation.”

Aside from this, Australian inflation data adopted a back seat as the RBNZ grabbed the attention with its decision to hold rates at 5.50% while removing hawkish comments from the monetary policy statement. AUD/USD and NZD/USD traders gathered more signals from RBNZ Governor Adrian Orr's Q&A session. He said there were discussions about a rate hike. Still, the strong consensus aimed to keep the current level of tightening, adding that some variables revealed that monetary policy is working.

What to watch?

Ahead of the Asian session, the Aussie’s economic docket will feature Retail Sales data, with the consensus expecting a jump from -2.7% to 1.5% MoM in January.

AUD/USD Price Analysis: Technical outlook

The AUD/USD pair shifted bearish bias after hovering around a narrow range of 0.6520-0.6580 and failing to crack the 200-day Moving Average (DMA) at 0.6559. that, along with fundamental reasons, pushed the spot price below the 0.6500 figure and extended its losses to a 9-day low. A fall below that area would expose the February 13 low of 0.6442, which, once cleared, could pave the way to test 0.6400. Conversely, if buyers reclaim 0.6500, they must regain the 100-DMA at 0.6533.

• AUD/USD meets with heavy supply following the release of the softer Australian CPI report.
• A strong pickup in the USD demand exerts additional pressure and contributes to the fall.
• Traders now look to the US Q4 GDP for some impetus ahead of the US PCE on Thursday.

The AUD/USD pair comes under intense selling pressure following the previous day's directionless price action and dives to a nearly two-week low during the first half of the European session. Spot prices slide back below the 0.6500 psychological mark in the last hour and seem vulnerable to waken further amid broad-based US Dollar (USD) strength.e

The initial market reaction to Tuesday's disappointing US Durable Goods Orders turns out to be short-lived amid expectations that the Federal Reserve (Fed) will keep interest rates higher for longer. Furthermore, a turnaround in the global risk sentiment – as depicted by a pullback in the equity markets – benefits the Greenback's relative safe-haven status and drives flows away from the perceived riskier Aussie.

The Australian Dollar (AUD), on the other hand, is undermined by domestic consumer inflation figures, which held steady at a two-year low in January as against consensus estimates for an uptick. In fact, the Australian Bureau of Statistics (ABS) reported that the headline CPI rose by the 3.4% YoY rate during the reported month, matching the lowest reading since November 2021 touched in December.

Adding to this, the Core CPI, which excludes volatile items such as fuel, fresh food and holiday travel, eased from the 4.2% YoY rate seen in the previous month to 4.1% in January. The data fuelled speculations that price pressures could abate more rapidly than expected and reduce the possibility of another interest rate hike by the Reserve Bank of Australia (RBA), which, in turn, weighs heavily on the AUD.

Meanwhile, the flight to safety triggers a fresh leg down in the US Treasury bond yields and might hold back the USD bulls from placing aggressive bets. This could lend support to the AUD/USD pair ahead of the crucial US Personal Consumption Expenditure (PCE) Price Index on Thursday. In the meantime, traders on Wednesday will take cues from the prelim US Q4 GDP print and Fed speaks for some impetus.

The Australian Dollar (AUD) is under the gun after below forecast Aussie Consumer Price Index (CPI) data. Economists at Société Générale analyze AUD/USD outlook. 

Australia’s CPI steady at 3.4% in January, core eases to 4.1%  

• AUD/USD makes modest recovery, up 0.05%, as markets eye upcoming Australian CPI and US GDP data releases.
• US Durable Goods Orders contract more than expected; Home Prices surge, fueling mixed sentiment on Wall Street.
• Reserve Bank of New Zealand's policy decision and Federal Reserve officials' remarks to influence AUD/USD direction.

The Australian Dollar pared some of its losses against the US Dollar on Tuesday and finished the session with minimal gains of 0.05%. As the Asian session begins, the AUD/USD trades at 0.6542, at the time of writing, down by 0.02% as investors brace for the release of crucial data.

AUD/USD sees slight gains as investors await key Australian and US economic indicators

Price action in Wall Street was muted as investors prepared for the release of a tranche of US data. On Tuesday, the US economic docket revealed that January’s Durable Goods Orders shrank -6.1% MoM, exceeding estimates and the previous month’s data of -4.5% and -0.3% contraction. Besides, US housing data revealed that Home Prices in December advanced 6.1% YoY, above forecasts, and November’s data.

Moving into Wednesday’s data, the Australian Bureau of Statistics (ABS) will feature inflation figures for January. According to the consensus, the Consumer Price Index (CPI) is expected to have risen 3.6% YoY. A monetary policy decision in New Zealand could underpin the Aussie Dollar (AUD) in the event of a hawkish hold by the Reserve Bank of New Zealand (RBNZ).

On the US front, the US Bureau of Economic Analysis (BEA) will announce the second estimate of the Gross Domestic Product (GDP) for the last quarter of 2023. The consensus expects GDP to stand at 3.3% QoQ. AUD/USD traders would also gather direction from three Federal Reserve officials crossing the newswires.

AUD/USD Price Analysis: Technical outlook

The AUD/USD remains neutral to downward bias, even though the exchange rate hovers around key technical levels, like the 100, 200, and 50-day moving averages (DMAs). Further confirmation is provided by the Relative Strength Index (RSI) punching below the 50-midline turning bearish, while the latest cycle high remains well below the current year-to-date (YTD) high at 0.6624.

For a bearish continuation, the AUD/USD must dive below the February 27 low of 0.6524, and the 0.6500 figure. Once those levels are cleared, look for a test of the YTD low of 0.6442. On the flip side, if buyers push the exchange rate above the 100 and 200-DMAs at around 0.6559, that could pave the way to challenge 0.6600.

• AUD/USD stages a goodish rebound from a one-week trough touched earlier this Tuesday.
• Reports that China will lift tariffs on Australian wine underpins the Aussie amid softer USD.
• Hawkish Fed expectations limit the USD decline and cap gains ahead of the US macro data.

The AUD/USD pair attracts fresh buyers near the 0.6525 area, or a one-week low touched earlier this Tuesday and builds on its steady intraday ascent through the first half of the European session. The momentum lifts spot prices back above mid-0.6500s in the last hour and is sponsored by a combination of factors.

The Australian Dollar (AUD) benefits from media reports, suggesting that China could lift the tariffs on Australian wine by the end of March. Apart from this, a modest US Dollar (USD) downtick assists the AUD/USD pair in reversing the previous day's downfall and stalling the recent pullback from a three-week peak touched last Thursday. A fresh leg down in the US Treasury bond yields, along with a stable performance around the equity markets, seems to undermine the safe-haven Greenback.

Any meaningful USD downfall, however, still seems elusive in the wake of expectations that the Federal Reserve (Fed) will wait until the June policy meeting before cutting interest rates. The bets were reaffirmed by the FOMC meeting minutes released last week and comments by several Fed officials, suggesting that the US central bank will stick to its hawkish stance amid sticky inflation and a still-resilient economy. This warrants caution before placing bullish bets around the AUD/USD pair.

Even from a technical perspective, spot prices remain below technically significant 100- and 200-day Simple Moving Averages (SMA). This further makes it prudent to wait for a convincing breakout through the said barriers before positioning for the resumption of the recent goodish recovery from the 0.6445-0.6440 region, or the YTD low touched earlier this February. Traders now look to the US macro data to grab short-term opportunities later during the early North American session.

Tuesday's US economic docket features the release of Durable Goods Orders, the Conference Board's Consumer Confidence Index and the Richmond Manufacturing Index. The focus will then shift to the Australian consumer inflation figures and the prelim US Q4 GDP on Wednesday. Traders this week will also confront the Australian Retail Sales and the US Personal Consumption Expenditures (PCE) Price Index on Thursday, which should provide fresh directional impetus to the AUD/USD pair.

• AUD/USD drops 0.35% amid mixed market sentiment and rising US Treasury yields, focus on key US and Australian data releases.
• Anticipation for Fed speeches and economic reports such as Durable Goods Orders and Consumer Confidence to influence rate cut expectations.
• Australian Dollar pressured from declining iron ore prices and forthcoming data on inflation, housing, and retail sales.

The AUD/USD slid 0.35% on Monday amid a mixed market mood and a rise in US Treasury bond yields. Investors bracing for the release of crucial economic data in the United States (US) and Australia were the main reason behind the pair’s price action, even though the Greenback posted solid losses. Nevertheless, as the Asian session begins, the pair exchanges hands at 0.6538, down 0.03%.

AUD/USD dives on mixed economic mood

Wall Street ended Monday’s session with a mixed tone as traders turned cautious. Eight Federal Reserve speakers would cross the wires during the week, while the release of Durable Goods Orders could support the Fed’s doves as orders are estimated to have plunged in January. Besides that, housing data and Consumer Confidence can reemphasize the Fed’s need to cut rates later in the year. Late in the week, the Fed’s preferred gauge for inflation, the Personal Consumption Expenditure (PCE) will update the inflation status and could rock US Treasury bond yields as expectations for rate cuts can adjust.

On Australia’s front, the economic docket is absent as AUD/USD traders brace for Tuesday's release of inflation figures for the last quarter of 2023.  The day after that, investors are eyeing the release of housing data, retail sales, and credit data.

The AUD/USD has remained pressured as Iron ore prices fell to their lowest in four months, as inventories in China pile up, amid the struggle of the property market.

AUD/USD Price Analysis: Technical outlook

The AUD/USD diving to a new four-day low opened the door for a deeper pullback after failing to reclaim the 200-day moving average (DMA) at 0.6560. If sellers push the spot price below the 0.6500 figure, a leg-down is seen with the next support level at the February 5 low of 0.6468, followed by the February 13 cycle low of 0.6442. Traders must be aware of this key level, as the pair could drop to 0.6400. Otherwise if buyers lift the exchange rate above the 200-DMA, look for a test of the 0.6600 mark.

• AUD/USD gauges temporary support near 0.6550 as the US Dollar edges down.
• The US core PCE data will guide forward action in the FX domain.
• Australian monthly CPI is anticipated to accelerate to 3.5% from 3.4% in December.

The AUD/USD discovers support near 0.6550 in the European session on Monday. The sell-off move in the Aussie asset has stalled as the US Dollar drops. The US Dollar Index (DXY) corrects to near 103.76 as hopes of the Federal Reserve (Fed) pivoting to rate cuts are imminent.

S&P500 futures remain muted in the European session, indicating a sideways trend. Investors need fresh insights for rate cuts by the Fed. This week, the United States core Personal Consumption Expenditure (PCE) price index data for January will influence market expectations for rate cuts.

Investors anticipate the monthly core PCE inflation data rose by 0.4% in January from 0.2% growth in December. Annually, the economic data is anticipated to have come out at 2.8% against 2.9% in December.

The consumer price inflation data for January has eased expectations for early rate cuts by the Fed. Last week, Fed Governor Christopher Waller said there is no need to hurry for rate cuts. The risks of reducing interest rates too soon are higher than delaying them.

Meanwhile, the Australian Dollar will be guided by the monthly Consumer Price Index (CPI) data for January, which will be published on Wednesday. Economists have projected that the inflation data rose slightly to 3.5% from the former reading of 3.4%. Sticky inflation data would prompt expectations of one more interest rate hike by the Reserve Bank of Australia (RBA).

• AUD/USD meets with some supply on Monday, though the downside remains cushioned.
• Retreating US Treasury bond yields undermines the USD and lends support to the major.
• Traders also seem reluctant to place directional bets ahead of this week’s key macro data.

The AUD/USD pair attracts some sellers on Monday following the recent repeated failures to find acceptance above the 100-day Simple Moving Average (SMA) and remains depressed through the first half of the European session. Spot prices currently trade around the mid-0.6500s, though lack follow-through amid a modest US Dollar (USD) downtick.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, struggles to capitalize on last week's goodish rebound from its lowest level since February 2 amid retreating US Treasury bond yields. Apart from this, the Reserve Bank of Australia's (RBA) hawkish stance, signalling that policymakers are unwilling to rule out another cash rate increase in the wake of sticky inflation, is seen lending some support to the AUDUSD pair.

Any meaningful USD downfall, however, seems elusive in the wake of firming expectations that the Federal Reserve (Fed) will wait until the June FOMC policy meeting before cutting interest rates. Furthermore, the risk of a further escalation of tensions between China and Taiwan, along with persistent geopolitical tensions stemming from the Middle East, could undermine the risk-sensitive Australian Dollar (AUD) and cap the AUD/USD pair.

The aforementioned mixed fundamental backdrop warrants some caution before placing aggressive directional bets ahead of this week's important macro releases, including the latest Australian consumer inflation figures on Wednesday. The market focus will then shift to Thursday's release of the US Core PCE Price Index – the Fed's preferred inflation gauge – and the official PMI prints from China, scheduled for release on the last day of the week.

• AUD/USD holds positive momentum around 0.6565 in Monday’s early Asian session. 
• Several Fed officials stated that they are worried about the risk of cutting rates too soon rather than keeping them high for too long.
• The Reserve Bank of Australia (RBA) said in its meeting minutes that another rate hike cannot be ruled out. 
• The Australian monthly Consumer Price Index (CPI) and US Gross Domestic Product Annualized (Q4) will be closely watched events.

The AUD/USD pair holds above the mid-0.6500s during the early Asian session on Monday. The pair maintain the upward momentum, with the US Dollar Index (DXY) hovering around the 104.00 mark. The market is likely to be quiet on Monday, and investors await the Australian monthly CPI on Wednesday for fresh impetus. AUD/USD currently trades near 0.6565, gaining 0.04% on the day. 

Several Federal Reserve (Fed) officials emphasized last week that they are worried about the risk of cutting interest rates too soon or too much rather than keeping them high for too long and damaging the economy. The US central bank wants to see further evidence that inflation is on a path to its 2% target before lowering interest rates. That being said, the higher-for-longer rate narrative in the US might cap the downside of the US Dollar (USD) and act as a headwind for the AUD/USD pair. 

The markets anticipated the Fed to cut its rate in May or June meeting, while the Fed’s Christopher Waller hinted that the first rate cuts could come later this year. Investors will take more cues from the Core Personal Consumption Expenditures Price Index (Core PCE), the Fed's preferred inflation measure, which is estimated to show an increase of 0.4% MoM and 2.8% YoY in January. 

On the Aussie front, the Reserve Bank of Australia (RBA) kept its cash rate steady at 4.35% earlier this month. The Australian central bank indicated in its meeting Minutes that inflation would return to target within a reasonable timeframe, even though this process would take some time. However, other rate hikes cannot be ruled out. 

The Australian monthly Consumer Price Index (CPI) for January will be due on Wednesday, and the Retail Sales will be released on Thursday. On the US docket, the Gross Domestic Product Annualized (Q4) and Core CPE will be in the spotlight this week, due on Wednesday and Thursday, respectively, 

Economists at the National Australia Bank still expect AU/USD to trend higher. However, they have pushed out their forecasts for the Aussie by a quarter.

AUD/USD still expected to appreciate

See: 

• AUD/USD could struggle to trade consistently above 0.7000 – ING
• AUD/USD to maintain positive momentum – Commerzbank

• AUD/USD fails to preserve its modest intraday gains amid the emergence of some USD buying.
• The Fed’s hawkish outlook supports elevated US bond yields and is seen underpinning the buck.
• A minor pullback in the equity markets further drives flows away from the risk-sensitive Aussie.

The AUD/USD pair continues with its struggle to find acceptance or build on its strength beyond the 100-day Simple Moving Average (SMA) and attracts some intraday sellers near the 0.6580 region on Friday. The downfall picks up pace during the first half of the European session and drags spot prices to a fresh daily low, around mid-0.6500s amid a modest US Dollar (USD) uptick.

Against the backdrop of persistent geopolitical tensions stemming from conflicts in the Middle East, fading hopes for early rate cuts by global central banks keep a lid on the recent optimism. This is evident from a minor pullback in the equity markets, which assists the safe-haven USD to gain some positive traction and undermines the risk-sensitive Aussie. The Greenback is further supported by the Federal Reserve's (Fed) hawkish outlook, which, in turn, exerts some downward pressure on the AUD/USD pair.

The minutes of the late January FOMC meeting released on Wednesday showed a broad uncertainty about how long borrowing costs should remain at their current level to bring down inflation back to the central bank's 2% target. Adding to this, comments by a slew of influential Fed policymakers suggested that the US central bank is in no hurry to cut interest rates. This remains supportive of elevated US Treasury bond yields and allows the USD to recover further from a nearly three-week trough touched on Thursday.

Moving ahead, there isn't any relevant market-moving economic data due for release from the US on Friday, leaving the USD at the mercy of the US bond yields. Apart from this, the broader risk sentiment might drive demand for the safe-haven buck and provide some impetus to the AUD/USD pair. Nevertheless, spot prices remain on track to register modest gains for the third straight week, though the lack of follow-through buying warrants some caution for bullish traders and before positioning for any further gains.

• AUD/USD modestly up at 0.6559, after peaking at 0.6595, with technical levels influencing movement.
• Solid US job data and economic expansion hints keep Fed rate hike expectations alive, impacting the Aussie.
• Fed officials' comments reflect cautious optimism on inflation, hinting at a data-driven approach to future rate cuts.

The Aussie Dollar registers minuscule gains against the US Dollar as Friday’s Asia session begins. The pair remains capped on the upside despite hitting a new month high at 0.6595, as a key technical resistance level that acted like a magnet drove the exchange rate toward the 0.6550s area. At the time of writing, the AUD/USD trades at 0.6559, up 0.06%.

Aussie touches monthly high but faces key resistance at 200-DMA

Wall Street ended Thursday’s session at all-time highs, portraying an upbeat market mood. US employment data was solid as the US Bureau of Labor Statistics (BLS) revealed that unemployment claims for the week ending on February 17, dropped to 201K from 213K, and below the consensus. At the same time, S&P Global's mixed February Flash PMI data, indicating economic expansion, supports the case for the US Federal Reserve to maintain elevated interest rates for a longer duration to address inflationary pressures.

The data sponsored a jump in the short end of the US Treasury bond yield curve, and capped the US Dollar’s (USD) losses, according to the US Dollar Index (DXY) at 103.94, down 0.05%. In the meantime, Federal Reserve officials crossed the wires, led by Vice-Chair Philip Jefferson, Philadelphia Fed President Patrick Harker, and Governor Lisa Cook.

Fed Jefferson said he’s optimistic about the progress on inflation, and despite adding that rate cuts could happen later, he remains data-dependent. Meanwhile, Philadelphia Fed Patrich Harket said the central bank is on track for a rate cut this year, and despite putting a May rate cut on the table, it’s not his base case scenario. Last but not least, Lisa Cook said she needs more confidence in inflation before cutting rates.

AUD/USD Price Analysis: Technical outlook

The AUD/USD daily chart is neutral to downward biased, with the exchange rate bracing at around the 200-day moving average (DMA) at 0.6561. A decisive break to the upside would pave the way to challenge Thursday’s high at 0.6595 ahead of 0.6600. On the other hand, a drop below the 0.6500 mark would sponsor a leg-down toward the current year-to-date (YTD) low of 0.6442.

• AUD/USD falls vertically from 0.6600 as the US Dollar gets a firm footing.
• Deepening geopolitical tensions have improved safe-haven appeal.
• Fed policymakers are less likely to cut interest rates soon.

The AUD/USD pair falls sharply after a steep rally to the round-level resistance of 0.6600 in the early New York session on Thursday. The Aussie asset faces a sell-off as the US Dollar has rebounded amid deepening Middle East tensions.

The Israeli army has intensified bombarding on Rafah, the southern region of Gaza in Palestine, as the former hopes that over 1.4 million refugees have been sheltered there. Escalating Middle East tensions have improved the appeal for safe-haven assets.

Meanwhile, the Federal Open Market Committee (FOMC) minutes for January’s policy meeting indicated that policymakers don’t want to cut interest rates early amid lack of conviction on the progress in inflation declining to the 2% target.

The Australian Dollar remains bullish lately as the Reserve Bank of Australia (RBA) minutes for February policy meeting indicated that policymakers were interested in raising the Official Cash Rate (OCR) further. It indicates that the current monetary policy of the RBA is not sufficiently restrictive to tame sticky price pressures.

Going forward, investors will focus on the United States preliminary S&P Global PMI data for February, which will be published at 14:45 GMT.

AUD/USD strengthens after a breakout of the Falling Pennant chart pattern formed on a four-hour scale. A breakout of the aforementioned pattern indicates a bullish reversal. The breakout of a Falling Pennant happens when selling pressure dries, and investors consider it a value-buy.

The 20-period Exponential Moving Average (EMA) near 0.6550 continues to provide support to the Australian Dollar bulls.

The 14-period Relative Strength Index (RSI) struggles to sustain in the 60.00-80.00 region. A bullish momentum would trigger if the RSI (14) manages to do so.

Fresh upside would appear if the asset breaks above the round-level resistance of 0.6600, which will drive the asset towards January 30 high at 0.6625, followed by December 4 high at 0.6688.

In an alternate scenario, a downside move below February 15 low at 0.6477 would activate sellers and will expose the asset to February 13 low at 0.6443 and the round-level support of 0.6400.

AUD/USD four-hour chart