- The People’s Bank of China announced more measures to support its fragile economy.
- Consumer sentiment in Australia dropped in January.
- Traders eagerly await the US PPI report.
The AUD/USD outlook indicates continued optimism about China’s efforts to support its weak economy, which has boosted the Aussie. Meanwhile, Australia’s decline in consumer sentiment could pressure the RBA to cut rates. On the other hand, market participants are looking forward to US inflation figures.
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Xem thêm : Greenback takes a step back on Monday
On Monday, the People’s Bank of China announced more measures to support its fragile economy. China has struggled to grow recently, pushing officials to introduce new policies to spur a faster recovery. For instance, the country will encourage companies to borrow more money overseas to improve capital flows. These measures have also boosted the weak yuan. At the same time, the Australian dollar, considered a proxy for the yuan, has soared.
Elsewhere, data on Tuesday revealed that consumer sentiment in Australia dropped in January. The sentiment index fell by 0.7%, indicating weaker spending in the near term. A decline in spending creates the right conditions for the Reserve Bank of Australia to start cutting rates in February.
Meanwhile, the greenback eased slightly after a strong rally amid a drop in Fed rate cut bets. Traders eagerly await the wholesale and consumer inflation numbers that will guide Fed policy. Upbeat inflation figures might wipe out expectations for any rate cut this year, boosting the dollar.
AUD/USD key events today
- US Core PPI m/m
- US PPI m/m
AUD/USD technical outlook: Stagnant near solid resistance zone
On the technical side, the AUD/USD price has rebounded after its recent swing low to retest the 30-SMA resistance. At the same time, the price is retesting the 0.6200 key support turned resistance and the 0.382 Fib retracement level. If bears maintain control, the price will respect this resistance zone and bounce lower to make a new low in the downtrend. In this case, the price would break below the 0.6150 support level.
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On the other hand, bulls might be ready to take charge. Although the price made a new low, it came after a long consolidation. At the same time, the RSI failed to dip into the oversold region, showing weaker momentum. Therefore, if bulls gain momentum, the price will breach the resistance to revisit the 0.6300 key level.
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