The pair is experiencing bullish momentum for the second day in a row, hitting a one-week high near 0.6453 on Tuesday. This positive move comes after a period of rapid decline and is supported by encouraging economic data from Australia.
The latest manufacturing PMI report for April contributed significantly to the appreciation of the Australian dollar. It showed an increase to 49.9 points, compared to 47.3 the previous month. This improvement brings the manufacturing sector closer to the critical threshold of 50.0, which distinguishes between industry growth and contraction. Additionally, the services PMI posted its strongest expansion in three months, and the private sector saw its fastest growth in two years during April.
These strong economic reports not only indicate a resilient economy but also have pro-inflationary implications. They reinforce the prospect that the Reserve Bank of Australia (RBA) can maintain higher interest rates for an extended period to effectively manage inflationary pressures.
Investors will also pay attention to the upcoming release of inflation statistics at the end of the week, which will provide more insight into the economic factors influencing the RBA's monetary policy decisions.
Additionally, the Australian dollar's gains were further supported by a reduction in investor concerns over geopolitical risks in the Middle East, contributing to a more favorable risk environment.
AUD/USD Technical Analysis
On the H4 chart, the AUD/USD pair completed a downward wave to 0.6362. A corrective move towards 0.6471 is underway. Once this correction is completed, a continuation of the downtrend towards 0.6300 is anticipated. The MACD indicator supports this bearish outlook even though its signal line is above zero, which typically suggests growth potential.
On the H1 chart, a consolidation range has formed around 0.6417. A break above this range could lead to an increase towards 0.6471. After this peak, a new downward wave is expected until 0.6363. A drop below this level could pave the way to reach 0.6300. The stochastic oscillator, with its signal line currently below 80 and pointing downwards, confirms this possible downward trajectory.
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.
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