The Australian dollar started the Thursday trading session by recovering from the bullish fair value gap, trading at approximately $0.651 as of the writing. This recovery was mainly driven by the Reserve Bank of Australia’s firm stance on monetary policy.
Future RBA Moves Hinge on New Economic Data
The minutes from the RBA’s November meeting revealed that the central bank remains cautious about inflation pressures. They believe monetary policy should stay restrictive until inflation is clearly moving toward the target.
However, the RBA also noted that future policy changes will depend on upcoming economic data.
Investor Shift to Safe Havens Hits AUD/USD Hard
Earlier in the week, the AUD/USD experienced selling pressures because escalating tensions in the Russia-Ukraine conflict led investors to seek safe-haven currencies like the US dollar.
Additionally, the US dollar remained strong due to expectations that the Federal Reserve will keep interest rates higher to manage inflation, which continues to support the US dollar against other currencies.
AUDUSD Technical Analysis – 21-November-2024
The primary trend of the currency pair should be considered bearish for the following reasons:
- The prices are below the 100-period simple moving average.
- AUD/USD declines within the bearish flag.
Additionally, the Stochastic Oscillator declined toward 50, meaning AUD/USD is not overbought, and the downtrend can potentially resume.
From a technical perspective, the bearish outlook is valid as long as AUD/USD is below the 100-period SMA or $0.653 mark. In this scenario, the next bearish target could be revisiting the November 14 low at $0.644.
- Good reads: Expect USDSGD Surge to 1.349 and Higher
Please note that the downtrend strategy should be invalidated if AUD/USD exceeds the $0.654 resistance, which is backed by the 100-SMA.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.
