AudUSD experiences a 0.3% decline amid economic and political developments

AUDUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.3%	-19.9 Pips
Week to-date	-0.33%	-21.6 Pips
November	-0.1%	-6.5 Pips

Upcoming key events (London Time)

Thu 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate)

What happened lately

In the United States, the recent presidential election has resulted in Donald Trump winning over his competitor, Harris, thereby securing his position as the 47th president of the United States. This political shift could potentially bring about changes in domestic and foreign policies, affecting economic sectors and market sentiment. Investors and stakeholders may observe cautious optimism as they await policies that could stabilize or disrupt current economic conditions.

Meanwhile, in Australia, the economic data highlights a decrease in the AiG Industry Index, which fell significantly to -28.8 points in October from -18.6 points in September. This decline indicates a sluggish industry performance, reflecting challenges that Australian manufacturing and services sectors may be facing. The data suggest a contraction in economic activity, raising concerns over business conditions, output, and employment levels. Concurrently, the Reserve Bank of Australia (RBA) has decided to maintain the cash rate target at 4.35%, showing no change from the previous rate. This decision, as reported by the Reserve Bank of Australia, aligns with a cautious approach amidst the current economic landscape, aiming to balance inflationary pressures while supporting economic recovery.

In relation to the AUDUSD currency pair, the dip of -0.3% to a trading value of 0.65706 on Wednesday signifies the market’s reaction to these developments. The weakening Australian industry performance likely contributes to the depreciation of the Australian dollar against the US dollar. Additionally, the unchanged cash rate from the RBA may not provide sufficient stimulus to bolster the Australian dollar amidst unfavorable economic indicators. With the upcoming high-impact event of the US Federal Reserve’s interest rate decision, volatility may increase, and traders will be monitoring for any changes that could further influence the AUDUSD dynamics. Should the Federal Reserve opt to adjust rates, the resultant market reaction could either exacerbate the current trend or offer potential support for the Australian currency, depending on the nature of the decision.

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What can we expect from AUDUSD today?

AUDUSD on Wednesday dropped -0.3% to 0.65706. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for AUDUSD looks bearish as the pair posted lower in Wednesday trading session.

Looking ahead for the day, immediate support level is at S1 0.65068 with break below could see further selling pressure towards S2 at 0.64429. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.66447 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.65119 would indicate selling pressure.

For the week to-date, take note that AUDUSD is mixed as compared to the prior week.

Key levels to watch out:

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