AUD/USD Forecast: Key Resistance Levels to Watch as US CPI Looms

2 weeks ago 5

Aussie Dollar (AUD/USD) Analysis

Risk sentiment props up AUD with US CPI information connected the horizon
US CPI expected to redirect attraction to the disinflation communicative aft consecutive months of stubborn terms pressures
AUD/USD reveals cardinal absorption levels successful the lawsuit CPI heads lower
Get your hands connected the Aussie dollar Q2 outlook contiguous for exclusive insights into cardinal marketplace catalysts that should beryllium connected each trader's radar:

Risk Sentiment Props up AUD with US CPI Data connected the Horizon

In the aboriginal stages of 2024, the emblematic affirmative narration betwixt the S&P 500 and the Aussie dollar began to interruption down. Stocks continued higher portion beardown US ostentation and robust growth buoyed the US dollar, weighing connected AUD which and sending AUD/USD sideways, oregon astatine times, lower.

However, the emblematic affirmative narration appears to beryllium getting backmost connected way arsenic some paths look to beryllium moving successful lockstep – thing that the correlation coefficient scale reveals astatine the bottommost of the illustration (using a 20 time rolling correlation). A correlation coefficient of 1 means 2 markets are perfectly successful lockstep and the existent speechmaking of 0.87 reveals a coagulated betterment of late. Therefore, arsenic the S&P 500 is connected way to trial its all-time high, AUD whitethorn payment from the continued hazard connected move.

The 1 imaginable hurdle this week is US CPI, which is expected to amusement a instrumentality to the disinflation communicative but markets volition beryllium focused connected a overmuch much nuanced measurement of inflation, month-on-month (MoM) halfway CPI. Month-on-month halfway CPI has trended astir the 0.4% mark- doubly that which is believed to bring ostentation backmost down to the 2% target. Early estimates person the fig astatine 0.3% but markets whitethorn look adjacent person arsenic this fig tends to beryllium rounded up oregon down. For example, a 2.6% speechmaking whitethorn person a bearish repricing successful USD with 0.34% being met with a much bullish effect contempt the information that some figures volition amusement arsenic 0.3%.

AUD/USD Compared to S&P 500 (Correlation Recovering)

Source: TradingView, prepared by Richard Snow

AUD/USD Reveals Key Resistance Levels successful the Event CPI Heads Lower

AUD/USD has risen supra the 200-day elemental moving mean (SMA) with easiness and appears to beryllium holding supra the April 2020 precocious of 0.6580 wherever terms enactment has consolidated successful caller days.

The main situation for AUD/USD bulls from present is breaching the portion of absorption that has appeared astir caller plaything highs astatine 0.6645. Even if that is achieved, the 0.6680 level is not excessively acold distant – different level that has capped AUD/USD upside. However, the caller consolidation forms what looks similar a bull pennant – a emblematic bullish pattern.

With a spot of assistance from the US ostentation study (lower than expected CPI), AUD/USD whitethorn find the catalyst to truly trial and perchance interruption done these levels of resistance. Support remains astatine 0.6580.

AUD/USD Daily Chart

Source: TradingView, prepared by Richard Snow

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Interest rates successful Australia are expected to stay connected clasp for the twelvemonth owed to stubborn ostentation concerns. This whitethorn assistance buoy the currency successful the lack of a antagonistic displacement successful planetary hazard sentiment.

Implied Interest Rate Hikes via Interest Rate Markets