- AUD/USD extends its week-long uptrend and rises to a three-week high on Tuesday.
- RBA’s hawkish stance remains supportive amid weak USD demand ahead of US PPI.
- The technical setup favors the bulls and supports the prospects for a further appreciating move.
The AUD/USD pair attracts some follow-through buying for the second day in a row on Tuesday and climbs to a fresh three-week high during the early part of the European session. Spot prices are currently trading around the 0.6600 level, with bulls looking to build on the momentum beyond the very important 200-day simple moving average (SMA) resistance.
Against the backdrop of the Reserve Bank of Australia’s (RBA) hawkish stance, a stable performance in global equity markets is seen lending some support to the risk-sensitive Australian Dollar (AUD). The US Dollar (USD), on the other hand, is struggling to gain significant traction amid expectations of larger interest rate cuts by the Federal Reserve (Fed). This turns out to be another factor acting as a tailwind for the AUD/USD pair, although the upside potential seems limited awaiting the crucial US inflation figures.
From a technical perspective, a sustained strength and acceptance beyond the 200-day SMA hurdle would be seen as a fresh trigger for bullish traders and pave the way for a further appreciating move. Since oscillators on the daily chart have just started moving into the positive territory, the AUD/USD pair could then rally towards the intermediate hurdle of 0.6655 en route towards the 0.6675-0.6680 region and the 0.6700 level. The latter coincides with the 78.6% Fibonacci retracement level of the July-August drop and should act as a pivotal point.
On the downside, the 0.6575-0.6570 area, or the 50% Fibo level, now seems to have emerged as an immediate support. This is followed by support near the 0.6545 horizontal zone, the 38.2% Fibo level near the 0.6520 region, and the psychological level of 0.6500. Some follow-through buying will suggest that the latest recovery move from the yearly low has come to an end and drag the AUD/USD pair towards the intermediate support of 0.6435 en route towards the 0.6400 level and last week’s low, around the 0.6350-0.6345 region.
AUD/USD daily chart
Economic indicator
Producer Price Index (YoY)
The Production Price Index (PPI) published by the Bureau of Labor Statistics is an estimate of changes in prices received by domestic producers of goods at each stage of processing (raw materials, intermediate materials and final goods). A higher than expected result is bullish for the dollar, while a result below the consensus is bearish.
Next post:
Tue Aug 13, 2024 12:30 PM
Frequency:
Monthly
Dear:
23%
Previous:
2.6%
Fountain:
US Bureau of Labor Statistics
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
