The Reserve Bank of Australia (RBA) held interest rates steady at 4.35% during its meeting on Wednesday, September 24, 2024, marking the seventh consecutive month at this level. The RBA is the only central bank among advanced economies, such as the U.S. Federal Reserve, the European Central Bank, the Swiss National Bank, the Bank of Canada, and the Bank of England, that has not initiated an easing policy or reduced interest rates, thereby strengthening the Australian dollar against the U.S. dollar.
In addition, a significant factor supporting the Australian dollar is the recent stimulus measures by the People’s Bank of China aimed at supporting the struggling Chinese economy, due to the strong trade partnership between Australia and China. Consequently, any positive economic data from China or new stimulus measures from Chinese authorities generally reflect positively on the Australian economy and the Australian dollar.
The Australian dollar continues its upward trend against the U.S. dollar, recording 0.6908 two days ago, the highest level since February 21, 2023. The exchange rate for the Australian dollar has risen by approximately 9% since hitting a low of 0.6347 on August 5, 2024, reaching its peak two days ago at 0.6908. It is currently trading near the level of 0.6900.
Analysts are closely monitoring the release today of the Core Personal Consumption Expenditures (PCE) Price Index in the United States, which is the preferred inflation indicator for the Federal Reserve. Therefore, caution is warranted, as any reading exceeding expectations for this indicator could significantly impact the Australian dollar against the U.S. dollar negatively.
From a technical perspective, if the pivot point of 0.6873 for the Australian dollar against the U.S. dollar is broken, there is a possibility that it could target support levels of 0.6840, 0.6785, and 0.6752. Conversely, if it surpasses the pivot point, it may aim for resistance levels of 0.6928, 0.6961, and 0.7016.
Regarding the MACD indicator (in blue), it is currently above the Signal Line (in orange) in the positive zone, indicating bullish momentum for the Australian dollar against the U.S. dollar.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
