The AUD/USD pair remains resilient above the key 0.6850 support level, with investors closely monitoring Federal Reserve developments and geopolitical tensions in the Middle East. In this article, we delve into the technical analysis and fundamental drivers shaping the pair’s movement, including China’s stimulus measures and the Reserve Bank of Australia’s (RBA) hawkish stance.
Key Takeaways:
- Key Level: AUD/USD holds above the 0.6850 support level, trading near 0.6880.
- Fed Outlook: Investors await Federal Reserve Chair Jerome Powell’s speech for more clarity on the path of monetary policy easing.
- Geopolitical Risks: Rising tensions in the Middle East could bolster safe-haven flows into the US Dollar.
- Chinese Stimulus: China’s economic stimulus continues to support the Australian Dollar as a proxy for Chinese economic growth.
Technical Analysis:
H1 Chart Analysis:
- Trend Structure: The AUD/USD pair has been trading within a defined range, with a Break of Structure (BOS) observed around 0.6850. The price bounced from a demand zone and is currently testing the 0.6890 level. Should the pair clear this resistance, it may target 0.6920.
- Support and Resistance: Immediate support is at 0.6850, with resistance at 0.6920 and a potential breakout target near 0.6955.
- Indicators: The RSI shows signs of bullish momentum, indicating that the pair could continue its upward movement in the short term.
H4 Chart Analysis:
- Trend Structure: The broader trend remains bullish, with the pair forming higher highs and higher lows since the last week of August. AUD/USD is supported at 0.6850, while resistance is found at the 0.6920-0.6950 region.
- Key Levels: Critical support lies at 0.6850, with potential upward targets near 0.6920 and 0.6955 if the bullish momentum sustains.
- Indicators: The RSI on the H4 chart remains neutral, providing room for either further consolidation or a breakout depending on upcoming economic triggers.
Economic Data:
The Federal Reserve’s decision to cut interest rates by half a percentage point, paired with geopolitical risks in the Middle East, is shaping market sentiment. Investors are awaiting more guidance from Fed officials, including Jerome Powell’s upcoming speech, to gauge the central bank’s next moves.
On the Australian front, the RBA’s hawkish stance and China’s stimulus efforts are providing ongoing support for the Australian Dollar. As China is Australia’s largest trading partner, its economic measures are directly influencing the strength of the AUD.
Trading Recommendation:
- Bullish Scenario: A break above the 0.6900 level could pave the way for further gains towards 0.6955. Traders may consider entering long positions above 0.6900, with stops below 0.6850.
- Bearish Scenario: If AUD/USD fails to break above 0.6900, it may revisit support at 0.6850. Short positions could be considered below 0.6850, with a target of 0.6770.
Conclusion:
The AUD/USD pair is holding steady above key support levels, with a focus on upcoming Federal Reserve announcements and geopolitical tensions. A break above 0.6900 could lead to further upside, while downside risks remain limited unless geopolitical risks escalate.
