AUD – Australian Dollar Tests Top of Range

The Australian dollar rose against the U.S. dollar, with the market reacting positively to news of a possible extension of the Middle East ceasefire, boosting risk assets across the board. However, further upward momentum for the Australian dollar may be limited. Recent weaker-than-expected Australian employment and inflation data have prompted investors to significantly lower the probability of a June rate hike to only 5%. The market currently sees a 70% probability of a final rate hike this year to 4.60%, likely in the fourth quarter. Technically, the RSI is trending downwards, the 5-day moving average has crossed below the 10-day moving average, and the exchange rate has been capped by the 25-day moving average for several days, suggesting a potential risk of a pullback for the Australian dollar. Based on Fibonacci retracement levels, the 38.2% retracement is at 0.7105, while the 50% and 61.8% retracements are at 0.7055 and 0.70, respectively. Note that 0.70 is also a key level for the 100-day moving average; a break below this level could lead to a move towards 0.69. Resistance is expected at the 25-day moving average of 0.7180 and 0.7270, followed by further resistance at 0.7380 and 0.75.

Forecast rabge:
Resistance: 0.7180 - 0.7270 - 0.7380 – 0.7500
Support: 0.7105 – 0.7055 – 0.7000* - 0.6900

Key Focus:
Monday
Australia May Manufacturing PMI (07:00)
Australia May TD-MI Inflation (09:00)

Tuesday
Australia Q1 Business Operating Profits (09:30)

Wednesday
Australia May Services & Composite PMI (07:00)
Australia Q1 GDP (09:30)

Thursday
Australia April Trade Balance (09:30)

Any questions? contact our professional analysis team