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18.09.202413:07 Forex Analysis & Reviews: AUD/USD. Analysis and Forecast

Exchange Rates 18.09.2024 analysis

Amid moderate U.S. dollar weakness, the AUD/USD pair is gaining positive momentum for the third consecutive day, marking five days of gains in the past six.

Exchange Rates 18.09.2024 analysis

This momentum is fueled by renewed U.S. dollar selling, which is constrained by dovish expectations surrounding the Federal Reserve.

In fact, markets are pricing in the possibility of a larger Fed rate cut of 50 basis points at the conclusion of the two-day monetary policy meeting that takes place today. The expectation of a Fed rate cut is limiting the recovery in U.S. Treasury yields overnight, which was driven by optimistic U.S. retail sales data. Overall, the positive tone in equity markets is limiting the U.S. dollar's recovery from its lowest level seen in 2023, providing a tailwind for the AUD/USD pair.

Meanwhile, the Australian dollar continues to receive support from the hawkish stance of the Reserve Bank of Australia (RBA). According to RBA Governor Michele Bullock, reducing inflation to the target range of 2-3% remains the Central Bank's top priority, and it would be premature to consider short-term rate cuts, as inflation remains too high. This continues to boost demand for the Australian dollar in the AUD/USD pair.

Nevertheless, ongoing concerns about slowing growth in China, the world's second-largest economy, could prevent traders from taking aggressive positions on the Australian dollar, which is closely linked to China. Investors may also wait for the much-anticipated FOMC decision on monetary policy before positioning themselves for an extended rebound of the AUD/USD pair from the 200-day simple moving average (SMA). Nonetheless, oscillators such as the RSI on the daily chart remain in positive territory, helping the pair remain in an upward trend.

*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.

Irina Yanina,
Analytical expert of InstaSpot
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