On Monday, July 8th, the Australian dollar fell by 0.18% against the US dollar, closing at 0.6737. This slight dip came after reaching a six-month high of 0.6761 during Asian trading on Friday, and was influenced by profit-taking. Additionally, the Australian dollar was dragged down by a decline in commodity prices on Monday. However, the downside potential for the Australian dollar is limited due to diverging interest rate expectations between the Reserve Bank of Australia (RBA) and the Federal Reserve.
Market expectations suggest a 27% probability of a rate hike by the RBA in August, while the probability of a rate cut by the Federal Reserve in September stands at 80%. The upcoming testimony of Federal Reserve Chairman Jerome Powell before Congress on Tuesday and Wednesday, as well as the US Consumer Price Index (CPI) data on Thursday, will be crucial events this week. If these events indicate a likely rate cut by the Federal Reserve in September, it could stimulate further upward movement for the Australian dollar.
Looking at the daily chart, if the AUD/USD pair closes above the 76.4% Fibonacci retracement level of the decline from 0.6870 to 0.6361 (which is at 0.6750), it could signal a bullish trend with a potential target of 0.6870. Resistance levels are seen at 0.6770, 0.6800, and 0.6840, while support levels are at 0.6700-10 and 0.6675-80.
In conclusion, the Australian dollar is facing volatility amid contrasting monetary policy expectations between the RBA and the Federal Reserve. Traders and investors will closely monitor upcoming events to gauge the potential impact on the currency's movement in the near term.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment