Key Points:
The Australian and New Zealand dollars faced pressure on Friday, marking their fourth consecutive week of losses as higher U.S. yields boosted the U.S. dollar.
See also: Dollar Strengthens on Slower Fed Rate Cuts
Picture: AUDUSD shows persistent bearish momentum, testing key support levels as seen on the VT Markets app.
The pair is in a downtrend, highlighted by the recent rejection around the 0.66613 level, followed by a drop toward 0.66241, where it closed.
The moving averages (MA 5, 10, 30) suggest bearish momentum, with the shorter MA (5) leading the price lower, which is typically a strong indicator that the market may continue to push lower.
The MACD histogram shows negative momentum, while the MACD line remains below the signal line, which confirms the selling pressure.
Key levels to watch would be support around 0.6614, which was a previous low, and resistance at 0.66613.
Should the price break below 0.6614, it could signal a deeper retracement, while a move above 0.66613 might indicate that the market is regaining bullish momentum.
The U.S. dollar pulled back slightly as Treasury yields eased, but strong U.S. economic data and growing bets that Donald Trump may return to the White House continue to support the dollar.
Markets now expect a restrained pace of Federal Reserve rate cuts, with futures implying 43 basis points of easing this year.
The Aussie is struggling due to fading benefits from China’s stimulus measures and expectations that Trump’s win could lead to AUD underperformance.
Local bonds saw a slight rise but remain down for the week. Traders are eyeing next week’s Australian inflation data, which could influence the Reserve Bank of Australia’s future rate decisions.
A trimmed mean inflation rate below 0.6% could open the door for a rate cut this year, though the first easing is currently expected by April 2024.
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