The pair has fallen rapidly in the last week, reaching 0.6592. This drop is mainly due to the strong performance of the US dollar, following better than expected US economic data. Investors are now speculating that the Federal Reserve could postpone any interest rate cuts.
The minutes of the recent Federal Reserve meeting have revealed concerns among policymakers about the possibility of persistently high inflation. This has led some members of the monetary committee to express their willingness to tighten policy further if inflation continues to rise.
Similarly, the minutes of the recent Reserve Bank of Australia (RBA) meeting revealed doubts among local policymakers. Although the RBA considered raising interest rates in May, it ultimately decided to maintain the current policy stance. Meanwhile, national statistics showed inflation expectations in Australia fell to 4.1% in May, the lowest level since October 2021.
AUD/USD Technical Analysis
On the AUD/USD H4 chart, a drop to 0.6663 was followed by a correction to 0.6780. Subsequently, a new wave of decline formed to 0.6580, which serves as the local target. Upon reaching this target, a correction to 0.6630 is possible (testing from below), followed by another drop to 0.6548. This target represents the initial target of the downtrend wave. Technically, this scenario is confirmed by the MACD indicator, with its signal line above zero and pointing strictly downwards.
On the H1 chart, a consolidation range has formed around 0.6645. The downward exit from this range achieved the local target of 0.6607. Since then, the market has corrected to 0.6646 (testing from below). Today the descending wave continues to 0.6580. After reaching this level, a consolidation range is expected to form around it. An upside breakout from this range could lead to a correction to 0.6630. On the contrary, a downward exit would open the possibility of a new decline to 0.6540. This scenario is technically confirmed by the stochastic oscillator, with its signal line below 20, indicating a possible start of a growth link up to 50.
Summary
The depreciation of the Australian dollar is largely influenced by the strength of the US dollar and the cautious outlook of the Federal Reserve and the Reserve Bank of Australia. Technical indicators suggest possible new declines with possible corrective rebounds. Market participants should closely monitor these levels as economic conditions and policy expectations evolve.
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.
