Daily Analysis For AUD/USD 25-05-2023

Daily Analysis For AUD/USD 25-05-2023

AUD/USD Analysis
Key Points for AUD/USD pair
• The AUD/USD pair is expected to encounter additional declines below the 0.6530 level, primarily due to ongoing delays in resolving the US debt-ceiling concerns.
• Federal Reserve official Bostic expressed his preference that the central bank should not entertain the idea of interest rate cuts in 2024.
• The Reserve Bank of Australia (RBA) has initiated the process of scaling back its bond purchases implemented during the pandemic. Approximately $20 billion worth of bonds that were previously purchased have now reached maturity.
Today's Scenario: - Following a sharp drop to around 0.6530 during the early Tokyo session, the AUD/USD pair discovered some intermediate support. However, the lack of a significant rebound in the Australian Dollar suggests a lack of strength, indicating the potential for further decline in the pair.
In the Asian market, S&P 500 futures have trimmed some of their early gains. The overall market sentiment is characterized by extreme caution as concerns over the US debt-ceiling issue persist. Conflicting opinions from various think tanks regarding the US borrowing limit have left investors puzzled.
Fitch Ratings has mentioned that the probability of the debt ceiling being raised or suspended is low. However, the managing director of the International Monetary Fund (IMF), Kristalina Georgieva, expressed confidence on Wednesday that the United States would avoid a debt default, as reported by Reuters.
Diagram of AUD/USD
AUD/USD
Economic Events : -
GMTEventImpactCurrency
00:01(United Kingdom) Car Production YoYLowGBP
00:50(Japan) Foreign Bond InvestmentLowJPY
00:50(Japan) Stock Investment by ForeignersLowJPY
01:00(Australia) RBA Payments System Board MeetingLowAUD
04:35(Japan) 40-Year JGB AuctionLowJPY
07:00(Germany) GDP Growth Rate QoQMediumEUR
07:00(Germany) GDP Growth Rate YoYMediumEUR
07:00(Germany) GfK Consumer ConfidenceHighEUR
07:45(France) Business ConfidenceMediumEUR
07:45(France) Business Climate IndicatorLowEUR
08:00(Spain) PPI YoYLowEUR
09:30(Slovenia) Tourist Arrivals YoYLowEUR
09:30(Slovenia) Business ConfidenceLowEUR
10:00(Euro Area) ECB Annual Report 2022LowEUR
10:00(Euro Area) ECB Guindos SpeechHighEUR
10:10(Italy) BTP Short TermLowEUR
11:00(United Kingdom) CBI Distributive TradesMediumGBP
11:00(Latvia) Unemployment RateLowEUR
12:00(Canada) CFIB Business BarometerLowCAD
13:30(Canada) Manufacturing Sales MoMLowCAD
13:30(United States) Jobless Claims 4-week AverageHighUSD
13:30(United States) Continuing Jobless ClaimsHighUSD
13:30(United States) Initial Jobless ClaimsHighUSD
13:30(United States) Chicago Fed National Activity IndexMediumUSD
13:30(United States) Real Consumer Spending QoQLowUSD
13:30(United States) GDP Sales QoQLowUSD
13:30(United States) Core PCE Prices QoQLowUSD
13:30(United States) PCE Prices QoQLowUSD
13:30(United States) GDP Price Index QoQMediumUSD
13:30(United States) Corporate Profits QoQMediumUSD
13:30(United States) GDP Growth Rate QoQMediumUSD
13:30(Canada) Average Weekly Earnings YoYLowCAD
15:00(United States) Pending Home Sales YoYMediumUSD
15:00(United States) Pending Home Sales MoMMediumUSD
15:30(United States) EIA Natural Gas Stocks ChangeLowUSD
15:30(United States) Fed Collins SpeechMediumUSD
16:00(United States) Kansas Fed Composite IndexLowUSD
16:00(United States) Kansas Fed Manufacturing IndexLowUSD
16:30(United States) 8-Week Bill AuctionLowUSD
16:30(United States) 4-Week Bill AuctionLowUSD
17:30(United Kingdom) BoE Haskel SpeechLowGBP
18:00(United States) 7-Year Note AuctionLowUSD
23:00(New Zealand) ANZ Roy Morgan Consumer ConfidenceLowNZD
Buy Scenario: - On the upside, the aforementioned Fibonacci retracement level and previous support line at 0.6550 and 0.6620 respectively act as immediate barriers to any short-term recovery for the AUD/USD pair.
However, bullish traders should exercise caution unless there is a clear breakthrough of the resistance confluence around 0.6230, which consists of the 10-day moving average (DMA) and a descending trend line that has been in place for the past two weeks.
Overall, the AUD/USD pair is likely to continue its downward movement, although the extent of further downside appears to be limited. Till we do not advise to buy AUD/USD.
Sell Scenario: - The AUD/USD pair continues its downward trajectory, extending its decline for the third consecutive day and reaching a six-month low around 0.6530 in early Thursday trading.
This decline confirms the previous day's break below an 11-week-old support-turned-resistance level, as well as a break below the 61.8% Fibonacci retracement level of the pair's upward movement from October 2022 to February 2023, which were situated near 0.6620 and 0.6550 respectively.
The bearish MACD signals and the breach of key support levels add further weight to the downside pressure on AUD/USD.
However, the almost oversold conditions indicated by the 14-day Relative Strength Index (RSI) suggest that the bearish momentum may temporarily pause around the 61.8% Fibonacci Extension (FE) level derived from the February-May price swings, located near 0.6445.
If the AUD/USD pair remains bearish below 0.6445, the focus will turn towards the November 11 low at 0.6385. Till we do not advise to sell AUD/USD.
Support and Resistance Level: -
SupportResistance
S1 0.6511-R1 0.6596
S2 0.6477-R2 0.6649
S3 0.6425-R3 0.6682

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