Audusd rises on improved US fiscal balance and easing inflation pressures

AUDUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	1.18%	72.7 Pips
Week to-date	2.88%	174 Pips
April	-0.48%	-30.1 Pips

Upcoming key events (London Time)

Fri 01:30 PM USD PPI excluding Food and Energy sectors (12-mth)

What happened lately

In the United States, the Monthly Treasury Budget Statement for March showed a significant improvement, recording a deficit of -$161 billion compared to the previous month’s deficit of -$307 billion. This suggests a better fiscal balance as the government manages its finances. The inflationary pressures in the U.S. economy also showed signs of easing. The CPI Inflation Rate, excluding the volatile food and energy sectors, decreased from 3.1% in February to 2.8% in March. Similarly, the overall CPI Inflation Rate for the 12-month period declined to 2.4% from the prior 2.8%. These decreases indicate that inflation might be gradually coming under control. However, the job market showed some signs of strain, as the Initial Unemployment Insurance Claims increased slightly to 223,000 in the week ending April 5, from the previous 219,000, hinting at potential challenges in employment. Additionally, the month-on-month CPI Inflation Rate, excluding Food and Energy, also saw a modest decrease from 0.2% in February to 0.1% in March, further pointing to lessening inflationary pressures.

The recent economic data from the U.S. suggests a mixed economic outlook with improving fiscal conditions but persistent challenges in the labor market. As such, the U.S. dollar might experience downward pressure if the market perceives the lower inflation rates as a rationale for the Federal Reserve to hold or slow down any increase in interest rates. This perception can be bolstered by the slight uptick in unemployment claims, potentially leading to a softer stance on monetary tightening. For the AUDUSD pair, this translates to potential appreciation of the Australian dollar against the U.S. dollar, as evidenced by its recent climb to 0.62230. Investors might anticipate less aggressive rate actions in the U.S., while any broader improvements in Australian economic data could further support the Aussie dollar’s strength relative to the greenback. As it stands, the upcoming U.S. PPI data will be closely watched for further indications of inflation trends and their impact on the currency pair.

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What can we expect from AUDUSD today?

AUDUSD on Thursday rose 1.18% to 0.62230. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for AUDUSD looks bullish as the pair ended higher after Thursday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 0.62765 with break above could target R2 at 0.63299 or figure level area. While towards the downside, we are looking at daily low of 0.61152 as an important support. Break below this level could weaken the current bullish momentum. A break above 0.62493 may suggest continuation after recent positive movement.

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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