The pair rose to 0.6192 mid-week, reflecting cautious optimism in the market. Traders remain vigilant ahead of key US December data, which could influence expectations for potential interest rate cuts in 2025. Previously, the Australian dollar recovered some of its losses as the US dollar reacted to producer price index statistics.
Upcoming key events for AUD
Australia will publish its employment report on Thursday, a key data point for assessing the state of the labor market. These figures are crucial for adjusting the Reserve Bank of Australia's (RBA) interest rate path forecasts.
New Q4 2024 inflation data for Australia will also be released at the end of the month. This data will be critical in shaping expectations for the next RBA meeting and its decisions on borrowing costs.
Investors are currently assigning a 70% chance of a rate cut at the RBA's February meeting. If finalized, the rate could decrease by 25 basis points from the current 4.35% annually. Market prices have already taken this possible decision into account.
However, lingering uncertainty over the RBA's future policy direction and terminal rate target for the year keeps investors cautious, limiting AUD's upside potential.
AUD/USD Technical Analysis
On the H4 chart, AUD/USD is developing an ascending wave with a target at 0.6211. This level is expected to be tested today, followed by a possible decline towards 0.6161. A consolidation range is likely to form around 0.6161. If the pair breaks higher from this range, a correction to 0.6290 could materialize. On the contrary, a break lower could trigger a new wave targeting 0.6116. The MACD indicator supports this scenario, with its signal line below the zero mark but pointing sharply upwards.
On the H1 chart, the pair is building a growth wave towards 0.6211, which is expected to reach today. After this, a corrective move to 0.6161 may occur. The stochastic oscillator confirms this scenario, with its signal line above the 50 mark and with an upward trend towards 80.
Conclusion
The Australian dollar's recent rally is tempered by uncertainty surrounding future RBA policy decisions. Key internal data, including fourth-quarter employment and inflation numbers, heavily influence market expectations. While technical indicators suggest near-term growth potential for AUD/USD, further gains will depend on clarity regarding the RBA's policy path and broader economic conditions.
By RoboForex Analysis Department
Disclaimer
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
