The Australian dollar (AUD) climbed to its highest point against the US dollar (USD) since February 2023, reaching 0.6922 on Monday. This surge was primarily driven by China’s announcement of economic stimulus measures. As Australia’s largest trading partner, China’s economic growth significantly impacts the Australian dollar. The stimulus package is expected to boost demand for commodities, further bolstering the Australian dollar, which is closely linked to commodity prices.
Adding to the Australian dollar’s strength was the recent weakness in the US dollar. Disappointing economic data from the United States has led to expectations that the Federal Reserve will continue to cut interest rates rapidly. This has made the US dollar less attractive to investors, further supporting the AUD/USD rally.
While the Australian dollar is enjoying a positive momentum, the Reserve Bank of Australia (RBA) maintained its interest rate at 4.35% per annum at its September meeting. This decision reflects the RBA’s cautious approach to managing inflation and employment trends. The RBA is not rushing to align its monetary policy with other global central banks, opting to closely monitor economic data.
This week is anticipated to be crucial for the Australian dollar. Australia is scheduled to release data on retail sales, construction, and trade indicators, which could significantly influence the currency’s trajectory.
Technical Analysis of AUD/USD
The AUD/USD market is currently experiencing the fifth wave of growth, with a consolidation range forming around the 0.6925 level. There is a potential for an upward break, targeting 0.6983. Following this level, a corrective movement could pull the pair back to retest the 0.6925 level. Should the bullish momentum continue, the next wave might reach 0.7033. The MACD indicator supports this bullish scenario, with its signal line positioned well above zero and trending upwards.
On the hourly chart, the AUD/USD has achieved a growth wave up to 0.6926 and is currently consolidating just below this level. If the pair exits this range downward, a correction to 0.6877 could be expected. Conversely, a breakout above could extend the uptrend towards 0.6982, potentially reaching 0.7033. The Stochastic oscillator, currently above 80 and trending downward, suggests a short-term pullback might occur before further advances.
