Audusd falls 0.35% due to mixed economic signals from US and Australia

AUDUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.35%	-22.8 Pips
Week to-date	0.38%	24.5 Pips
May	1.02%	65.1 Pips

Upcoming key events (London Time)

No major events for the day.

What happened lately

In the United States, the Federal Reserve decided to keep the Federal Funds Rate steady at 4.5%, maintaining its previous rate. This decision indicates a cautious approach by the Federal Reserve, which might be aiming to observe how the economy adjusts to the cumulative effect of previous interest rate hikes and prevailing economic conditions. By keeping the rate unchanged, the Federal Reserve likely expresses confidence that the current rate is adequate to manage inflation without stifling economic growth. The decision to not alter the rate suggests that the U.S. economy might not be facing immediate risks that require further adjustments to the interest rate, signaling stability in the monetary policy outlook.

In Australia, the AiG Industry Index for March shows an improvement to -15 points from -22.2 points in the previous month, indicating a less severe contraction in the manufacturing sector. This points to a potential recovery or stabilization of industrial activities despite the negative figures. However, the optimism from industrial data is dampened by a sharp decline in dwelling approvals for March, which fell to -8.8% compared to -0.2% from the revised figure in February. This significant decrease in dwelling approvals suggests a slowdown in the housing market, likely reflecting cautious sentiment among builders and consumers in response to higher interest rates and economic uncertainties. The contrasting indicators from the manufacturing and housing sectors provide a mixed picture of the Australian economy.

The steady interest rate from the U.S. Federal Reserve offers moderate support for the U.S. dollar through stability and continued attractivity for dollar-denominated assets, which coupled with Australia’s mix of economic signals, exerts pressure on the AUDUSD pair. The combination of Australia’s improving industry index and weak housing approvals creates an environment of mixed expectations. On Wednesday, the AUDUSD showed a decline of -0.35% to 0.64660, as the market digests the contrasting economic developments from both countries. Without any major forthcoming events, the pair seems poised for a phase of consolidation, as traders await more definitive economic indicators that could guide future movements.

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What can we expect from AUDUSD today?

AUDUSD on Wednesday dropped -0.35% to 0.64660. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for AUDUSD looks mixed as the pair is likely to consolidate above 0.6448 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 0.65147 or trades above daily pivot 0.64814. Break above could target R1 at 0.64993. While to the downside, we are looking at 0.6448 (S1) and daily low of 0.64634 as support levels. AUDUSD need to break on either side to indicate a short-term bias. A close below 0.64634 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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