- The AUD/USD experienced a significant decline of over 1.30% throughout the week, primarily due to a prevailing risk-off sentiment.
- The Australian economy is facing challenges due to China’s growth figures in Q2 falling below expectations and the impact of lower iron ore prices.
- Impressive Australian employment figures may prompt the Reserve Bank of Australia to consider raising interest rates, while job indicators in the United States reveal signs of vulnerability.
The Australian Dollar slightly declined during the North American session, prolonging its losses by over 0.20% against the US Dollar. The AUD/USD pair is poised to conclude the week with a decline of over 1.30% and is currently trading at 0.6693.
The Australian Dollar Has Been Impacted by Fluctuations in Iron Ore Prices and Weaker Economic Data From China
There was a significant preference for safety among traders on Friday, which resulted in substantial losses for high-beta currencies. The growth data for the second quarter in China did not meet expectations, which has resulted in a negative impact on the sentiment of investors. Because of this, the Australian dollar has also been confronted with difficulties, as its value is closely connected to the performance of the economy, which is the second largest in the world.
In the meantime, the prices of commodities, including New Zealand’s currency, are affecting the antipodeans. A significant drop of 1.70 percent has been observed in the prices of iron ore, which represents a continuation of the downward trend that has been observed over the past two weeks, with losses exceeding 3.70 percent.
A further point to consider is that the Greenback has made a comeback after falling to levels not seen since March 21. It is currently hovering around the 103.60 region. As this article is being written, the US Dollar Index (DXY) has reached 104.29, indicating a slight increase of 0.11%. This is occurring as the index is getting closer to the significant 200-day moving average (DMA). In the event that that level is surpassed, there is the possibility of even greater gains.
Because the most recent employment data from Australia was vital, the Reserve Bank of Australia (RBA) may be considering raising interest rates in August. This is because the RBA is concerned about the macroeconomic environment. In terms of the situation in the United States, the data on employment consistently indicate that there needs to be more strength. The Federal Reserve’s policymakers, on the other hand, have yet to provide any indication as to when they might consider implementing rate cuts. Earlier than making any changes to the policy, they have emphasized the importance of gaining more confidence in the situation.
As traders look ahead to the day, they will be paying close attention to the speeches that will be delivered by Raphael Bostic of Atlanta and John Williams of the New York Federal Reserve.
Technical Analysis of AUD/USD Price
If the current weakness continues, the AUD/USD pair is likely to test the 50-day moving average (DMA) at 0.6668. This is because the pair has accumulated downward momentum after falling below the 0.6700 level. According to the Relative Strength Index (RSI), sellers have taken control of the market because it has fallen below the line that represents neutrality at 50. According to this, there is more room for decreased prices.
Following the successful push of prices below 0.6668, market participants will be keeping a close eye on the subsequent support levels, which include the low of 0.6619 on June 28 and the 100-day moving average at 0.6604. The level of 0.6700 represents a significant resistance point, and the next level to watch is the peak that occurred on July 18 at 0.6743.