The Australian dollar has momentarily halted its downward trajectory against the US dollar, stabilizing around the 0.6565 level. In the absence of meaningful domestic data from Australia, AUD movements are largely influenced by the performance of the dollar and economic developments in China. The dollar recently weakened to a one-week low of 7.2 against the US dollar, following a series of macroeconomic updates from China.
China's industrial production showed an impressive year-on-year increase of 7.0%, surpassing both the forecast growth of 6.5% and the previous rate of 4.6%. Capital investment also exceeded expectations, registering a year-on-year increase of 4.2% versus the 3.2% forecast. Retail sales growth in February was reported to be 5.5% year-over-year, although a slowdown from January's 7.4% increase. Additionally, the January employment report indicated a slight rebound in unemployment, rising from the previous 5.1% to 5.3%.
Despite these positive indicators from China, the yuan's valuation remains pressured by strong inflation data from the United States, complicating the Federal Reserve's path toward easing monetary policy. The prevailing market expectation now leans towards a possible 25 basis point rate cut by the Federal Reserve in June, with a probability of around 60% of this outcome, a change from previous predictions of a cut of types in spring.
Given Australia's close economic and trade ties with China, these China statistics are particularly significant for the performance of the AUD.
technical analysis of
Analysis of the AUD/USD H4 chart indicates a consolidation phase around the 0.6570 level, with expectations of a downward break leading to the continuation of the decline towards the local target of 0.6506. After reaching this target, a possible corrective move to 0.6570 (testing from below) is anticipated, followed by a further decline to 0.6477. The MACD indicator, with its signal line pointing downwards, supports this bearish scenario.
On the H1 chart, the AUD/USD pair has concluded its descending wave structure at 0.6570, with a consolidation phase currently being observed around this mark. A downward break of this consolidation is expected today, targeting the 0.6506 level. Once this target is reached, the start of a corrective phase can be considered until 0.6570 (test from below). The stochastic oscillator, currently above 80 and about to descend to 20, corroborates the probability of this continuation of the downtrend.
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.
