The AUD/USD pair started the week on a stable note, trading around 0.6590 after experiencing a notable drop last Friday due to concerns about China’s economic stimulus measures. Investors were left wanting more details following China’s announcement of debt reduction and support for local governments, as transparency was lacking. Since China is Australia’s top trading partner, any economic changes in China can significantly impact the AUD’s performance.
Market sentiment is also being influenced by uncertainties surrounding Donald Trump’s U.S. presidential win, particularly in relation to U.S.-China relations. This week is crucial for Australian data, with the release of Q3 payroll statistics and overall employment data. These numbers are important for assessing the Reserve Bank of Australia’s (RBA) future monetary policy decisions. RBA Governor Michele Bullock’s participation in a regulatory panel may provide insights into the central bank’s stance on inflation and economic demand.
In terms of technical analysis, the AUD/USD is currently trading around 0.6589 in a narrow consolidation range. There is a possibility of a downward breakout towards 0.6544, potentially extending to 0.6494 before a reversal. A reversal towards 0.6715 could be on the cards after reaching these levels, with an interim target at 0.6600. The MACD indicator suggests a bearish outlook in the short term, as it is pointing downwards from above the zero line.
Looking at the hourly chart, there was a decline to 0.6557 followed by a correction to 0.6600. Expectations are for a further dip to 0.6544, with a potential rebound to 0.6600 before a possible continuation of the downward trend towards 0.6494. The stochastic oscillator, currently below the 50 mark, indicates the potential for further declines.
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