The AUD/USD currency pair experienced a significant surge on Tuesday, reaching its highest point in 2024, propelled by positive economic news from China. The People’s Bank of China (PBoC) announced a series of stimulus measures aimed at bolstering the Chinese economy. These measures have a positive impact on the Australian dollar due to the strong economic ties between Australia and China.
The Reserve Bank of Australia (RBA) is anticipated to maintain its current interest rate levels. However, market participants exhibit mixed sentiment regarding the future trajectory of rates. A recent Reuters poll of 44 economists reveals that only four anticipate a rate cut by year-end. Nevertheless, investors assign a 60% probability of a rate reduction in December. So far, the RBA has adopted a cautious approach concerning inflation and economic activity, believing that the economy can adjust without intervention. However, the global trend of rate cuts initiated by central banks, including the Federal Reserve (Fed) and the European Central Bank (ECB), could potentially influence the RBA’s stance in the future.
Technical Analysis: A Potential Decline
From a technical perspective, the AUD/USD pair has completed the fifth wave of growth, reaching a target of 0.6864. Currently, a potential initial wave of decline to 0.6740 is being considered. Following this decline, a corrective move to 0.6803 could occur, establishing the upper limits of a new consolidation range. A downward exit from this range might lead to further declines towards 0.6740, with a potential continuation down to 0.6677 and possibly extending to 0.6616. The MACD indicator, currently at its peak, suggests an impending decline, supporting this bearish outlook.
On the H1 chart, the AUD/USD is forming a downward structure targeting 0.6805. Subsequently, a narrow consolidation range may develop, with a potential downward breakout leading to further declines towards 0.6744. This scenario is corroborated by the Stochastic oscillator, whose signal line is currently above 80 but poised to move downward sharply.
The AUD/USD pair’s recent surge reflects the positive economic news from China and the close relationship between the two countries. However, the RBA’s upcoming rate decision and the global trend towards rate cuts will continue to shape the Australian dollar’s future movement. Technical indicators suggest a potential decline in the pair, but the overall outlook remains uncertain.
