The AUD/USD currency pair has climbed to a new peak, reaching 0.6815, marking its highest point since December 28th of last year. This surge in the Australian dollar is fueled by a combination of factors, including the aggressive rate cuts by the US Federal Reserve and strong Australian employment data.
The Fed’s rate cuts have sparked expectations that other central banks, including the Reserve Bank of Australia (RBA), may follow suit. This easing of monetary policy is seen as positive for the global economy, particularly for riskier assets like the Australian dollar.
Adding to the AUD’s strength, Australian employment data for August significantly exceeded expectations, showing a 47.5k increase in jobs, a far cry from the anticipated 25.0k. This robust job growth kept the unemployment rate steady at 4.2%, further bolstering the Australian economy.
Despite this positive economic backdrop, the RBA is expected to maintain its interest rate at the current level during its upcoming meeting. Analysts predict that the RBA will remain cautious on monetary policy changes until at least December, and potentially not until the second quarter of next year. This cautious approach reflects the RBA’s strategy of waiting for more concrete signs of inflation before taking decisive action.
The current favorable risk environment suggests that the AUD could potentially reach even higher levels in the near future.
Technical Analysis
Looking at the technical picture, the AUD/USD market is currently in the fifth wave of growth, aiming for a target of 0.6855. This target is likely to be reached soon, followed by a corrective movement back down to 0.6790, where it will be tested from above. This could define the upper boundary of a new consolidation range.
If the pair breaks below this range, a further decline to 0.6736 is possible, signaling the start of a new downward trend towards 0.6640 and potentially continuing to 0.6590. However, the MACD indicator, currently at its highs and pointing upwards, supports a bullish scenario in the short term.
On the H1 chart, AUD/USD is forming a growth structure towards 0.6855. A short rise to 0.6848 is anticipated, followed by a slight decline to 0.6825. After this minor correction, another growth phase towards 0.6855 is expected, which could exhaust the potential of the current growth wave. The Stochastic oscillator, with its signal line above 50 and pointing upwards, reinforces the likelihood of continued upward movement before any significant pullback.
In Conclusion
The AUD/USD pair is on a strong upward trajectory, driven by expectations of further easing in US monetary policy and robust Australian economic data. Technical indicators suggest further upside potential in the near term, but investors should remain vigilant for potential corrections and shifts in market sentiment.
