AUD/USD dips slightly amid mixed economic signals and anticipation of key data releases

AUDUSD Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	-0.02%	-1.5 Pips
Week to-date	-0.19%	-11.7 Pips
January	1.13%	70.5 Pips

Upcoming key events (London Time)

Wed 12:30 AM AUD CPI Inflation Rate (3-mth)
Wed 12:30 AM AUD Monthly CPI Indicator (12-mth)
Wed 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate)

What happened lately

In December, the U.S. experienced a rise in new-home sales by 3.6%, marking a slowdown from the 5.9% increase recorded in November. This reduction indicates a tapering in the housing market momentum, which could be reflective of broader economic conditions such as higher interest rates potentially affecting mortgage rates. While the sales are still growing, the lesser percentage increase may suggest a cooling down that might be indicative of consumer caution or affordability challenges in the housing sector. The U.S. economic backdrop remains a vital indicator for global markets, including the Australian dollar, due to interconnected economies.

For Australia, upcoming key economic indicators include the CPI Inflation Rate for the third quarter and the monthly CPI Indicator for the twelve-month perspective, both slated for release on Wednesday. These will provide insights into the inflationary pressures within the country. The inflation data is especially critical as it may influence the Reserve Bank of Australia’s monetary policy decisions moving forward, impacting interest rates and economic outlook. A higher-than-expected inflation rate could prompt the RBA to maintain or increase interest rates, aiming to mitigate inflation, which would, in turn, have implications for the Australian economy and its currency.

The AUDUSD pair saw a slight drop of 0.02% to 0.62906, influenced by current market sentiment and prevailing economic news. The mutual impact of the U.S. data combined with Australia’s forthcoming inflation data can lead to further fluctuations in the AUDUSD. A stronger U.S. economic perspective, despite the slowdown in home sales growth, alongside anticipated Federal Reserve interest rate decisions scheduled for Wednesday, could underpin the U.S. dollar, exerting downward pressure on the Australian dollar. Conversely, if Australia’s inflation data surpasses expectations, hinting at potential RBA policy tightening, this could reverse some pressure and strengthen the Australian dollar against the U.S. dollar. Therefore, traders should watch these economic releases closely as they could set the tone for the AUDUSD movements in the near term.

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What can we expect from AUDUSD today?

AUDUSD on Monday dropped -0.02% to 0.62906. Price is above 9-Day EMA while Stochastic is falling.

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

Looking ahead for the day, immediate support level is at S1 0.6274 with break below could see further selling pressure towards S2 at 0.62574. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.63080 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.62744 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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