22 December 2024

Will AUD/USD Reach $0.68500? Key Insights on Aussie Inflation and FOMC Speeches

The AUD/USD outlook is influenced by upcoming inflation data and FOMC speeches. Strong inflation could delay RBA rate cuts, while Fed rate cut speculation may increase market volatility.

Will AUD/USD Reach $0.68500? Key Insights on Aussie Inflation and FOMC Speeches

The upcoming speeches from FOMC members Bowman and Kashkari are set to capture investors' attention as they react to the latest US Jobs Report and provide insights into potential interest rate decisions.

The possibility of a 50-basis point rate cut by the Federal Reserve in November could significantly influence the demand for the US dollar, potentially pushing the AUD/USD pair towards the $0.68500 mark. Conversely, if the Fed decides to postpone any rate cuts until December, we may see the AUD/USD decline towards $0.67.

Recent data from the CME FedWatch Tool indicates a sharp drop in the likelihood of a 50-basis point cut in November, plummeting from 53.3% on September 27 to 0% by October 4.

In the near term, the trajectory of the AUD/USD will largely depend on inflation data from Australia and commentary from FOMC members. Strong inflation signals could bolster demand for the Australian dollar, especially if they suggest a delay in RBA rate cuts until 2025. On the flip side, if FOMC members advocate for aggressive rate cuts, it may create a divergence in monetary policy that favors the Aussie dollar.

A narrowing interest rate differential between the US and Australia could pave the way for the AUD/USD to return to $0.68500.

Investors are advised to keep a close eye on central bank signals and economic indicators, as these factors will likely influence AUD/USD trends. Additionally, developments related to the ongoing conflict in the Middle East should not be overlooked, as risk aversion could lead to a flight to safety, impacting the demand for the Australian dollar.

Traders are encouraged to stay updated with real-time data, news, and expert analysis to refine their trading strategies.

Despite last week's fluctuations, the AUD/USD remains well above both the 50-day and 200-day EMAs, reinforcing bullish price signals. A breakthrough above the $0.68006 resistance level could facilitate a move towards $0.68500, potentially allowing bulls to target the $0.69 level.

On the contrary, a dip below the 50-day EMA might signal a decline towards the $0.67050 support level.

With the 14-period Daily RSI currently at 49.49, the Australian dollar could test the $0.67050 support before reaching oversold conditions.

Source: FX Empire