22 Oct 2024

CURRENT;-0.66862

TARGET;-65500

STOPLOSS;-67500

Australian Dollar declines due to rising risk aversion

ü  The yields on US Treasury bonds for the 2-year and 10-year maturities are currently 4.02% and 4.19%, respectively, as of the time of this writing.

ü  On Monday, Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, emphasized the importance of closely observing the US labor market for indications of swift destabilization. He advised investors to prepare for a slow and measured approach to interest rate reductions in the upcoming quarters, indicating that any monetary easing is expected to be moderate rather than forceful.

ü  National Australia Bank updated its forecast regarding the Reserve Bank of Australia (RBA) in a recent communication. The bank indicated, "We have advanced our expectations for the timing of interest rate reductions, now predicting the initial cut to occur in February 2025, rather than in May." They maintain their outlook for a series of gradual reductions, projecting that rates will decline to 3.10% by the beginning of 2026.

Technical Analysis: Australian Dollar drops to near 0.6650, eight-week lows

ü  The AUD/USD pair is currently trading near 0.6660 on Tuesday. An analysis of the daily chart reveals that the pair is positioned below the nine-day Exponential Moving Average (EMA), suggesting a short-term bearish trend. Additionally, the 14-day Relative Strength Index (RSI) is below the 50 mark, further supporting the bearish outlook.

ü  On the downside, the pair could test its eight-week low of 0.6622, last reached on September 11, followed by the psychological level of 0.6600

ü  Resistance may come from the nine-day EMA at 0.6700, followed by the 50-day EMA at 0.6734. A break above this level could open the door for a move toward the psychological resistance of 0.6800