Market Updates on AUD/USD and US Dollar Trends
During Asian trading on Friday, the AUD/USD pair held onto its gains from Thursday, hovering near the 0.7200 level. This resilience in the Australian currency reflects positive expectations that the Reserve Bank of Australia (RBA) will implement another interest rate hike in its upcoming meeting.
A significant majority of economists—30 out of 33 surveyed by Reuters—anticipate that the RBA will raise the official cash rate (OCR) by 25 basis points to reach 4.35%.
The RBA’s assertive stance is bolstered by increasing inflationary pressures in Australia. Recent data revealed that the consumer price index (CPI) climbed to an annualized rate of 4.1% in Q1, up from 3.6% previously, aligning with forecasts.
Conversely, the US dollar (USD) is likely to conclude the week on a weak note, primarily impacted by interventions in the foreign exchange market from Japan. At the moment, the U.S. Dollar Index (DXY)—which measures the dollar against six major currencies—is sitting close to 98.00, a point not seen in nearly ten days.
Attention will turn to the April US ISM Manufacturing Purchasing Managers Index (PMI) data, expected to be released at 2:00 GMT, with projections of an increase to 53.0, rising from the 52.7 recorded in March.
AUD/USD Technical Outlook
Currently, AUD/USD is trading around the 0.7200 mark, staying above the 20-day exponential moving average (EMA) of 0.7125, which indicates a favorable short-term bullish trend. The pair has made considerable progress from its lows in late December, and maintaining levels above this EMA suggests that buyers still retain control.
The Relative Strength Index (RSI), which is near 60, indicates solid upward momentum without showing any signs of being overbought. This could mean ongoing demand as long as the current trend persists.
On the downside, the immediate support sits at the 20-day EMA of 0.7125. If this level is breached, it might suggest a weakening in bullish momentum, potentially leading to further corrections below the 0.7100 threshold. However, as long as AUD/USD remains above this EMA, the focus will likely shift back to the upside, aiming to reclaim the multi-year high of 0.7220. A decisive move past this level could pave the way toward reaching 0.7300.
In summary, the Australian dollar appears to be in a strong position as the RBA gears up for potential interest rate changes, while the US dollar faces pressures heading into the weekend.
