AUD – The Australian dollar holds above the 25-day moving average, poised for a new upward move

The Australian dollar is hovering around the 0.70 level against the US dollar. It touched a one-month high of 0.7026 on Tuesday, and while still within its recent high range, it has not yet generated significant upward momentum, partly due to geopolitical events. The US military's continued strikes against Iran and the Houthi allies' announcement of a maritime embargo against Saudi Arabia have limited the Australian dollar's gains due to safe-haven demand. However, rising oil prices could push up Australian inflation and maintain the Reserve Bank of Australia's (RBA) tightening stance, providing support for the Australian dollar against the US dollar. The RBA's interest rate has risen to 4.35% after three rate hikes this year. When it held rates steady in June, it clearly stated that further rate hikes were still under consideration, and most economists surveyed still expect another rate hike at the August 11 meeting.

Australia will release its employment report on Thursday. Market consensus expects June employment growth to slow to 15,000 from 40,300 in May, with the unemployment rate remaining at 4.4% and the labor force participation rate steady at 66.7%. Preliminary July Purchasing Managers' Indices (PMIs) for manufacturing, services, and composite will be released on Friday, all slightly above the 50.0 threshold. Furthermore, Australia will release its June CPI data next week; the market widely expects that if the June CPI data shows inflationary pressures continuing to exceed the target range, the likelihood of a rate hike by the Reserve Bank of Australia in August will increase significantly.

Regarding the Australian dollar against the US dollar, the chart shows a golden cross, with the 10-day moving average crossing above the 25-day moving average, suggesting the Australian dollar is poised for an upward move. The 25-day moving average at 0.6950 will be a key level, as recent consolidation has been held above this area. Using the Fibonacci retracement level, the 38.2% retracement level is at 0.7020, while the 50% and 61.8% levels are at 0.7070 and 0.7120, respectively. The 100-day moving average also warrants attention. Support was found at this indicator at the end of March, and the subsequent break below it in early June extended the downtrend. Therefore, the 100-day moving average currently at 0.7060 still holds some technical significance. Stronger resistance is seen at 0.72. Support is seen at 0.69, with stronger support at 0.6860 and the 250-day moving average at 0.6820. After that, the 0.67 level is a key bottom that has been tested for several days since the beginning of the year.

Forecasted range:
Resistance: 0.7020 – 0.7060/70* – 0.7120 – 0.7200
Support: 0.6950 - 0.6900 - 0.6860 - 0.6820 – 0.6700**

Key Focus:
Thursday: Australian June Employment Data (09:30)
Friday: Australian July PMI (07:00)

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