Investment Tips 29-05-2023 14:31 37 Views

AUD – USD Forecast: US PCE Data Boosts Fed Expectations

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AUD – USD Forecast: US PCE Data Boosts Fed Expectations

The recent retreat of the AUD/USD currency pair from the 0.6530 level raised expectations of potential interest rate hikes by the central bank. Hawkish bets from the Fed have sparked interest in the AUD-USD forecast. Solid gains in technology stocks increased demand in US equities shaping the overall market mood.

Investors exhibited a positive market sentiment and showed a preference for risk-sensitive assets. The overall market mood has changed due to solid gains in technology stocks, leading to increased interest in US equities. This positive sentiment has contributed to the selling pressure on AUD/USD.

US Dollar Index Strengthens on Delay in Raising US Debt Ceiling

The US Dollar Index recorded three consecutive weeks of highly bullish settlements, buoyed by the White House’s decision to postpone raising the US debt-ceiling limit. Lengthy negotiations between the White House and Republican leaders have impacted the US Treasury, with discussions focusing on raising the debt ceiling while ensuring non-defense spending aligns with last year’s budget.

The AUD/USD pair experienced selling pressure near the 0.6525 level after a hesitant recovery during the early Asian session. Anticipated long-term bullish movement is expected for the US Dollar Index (DXY) due to a rebound in the Fed’s preferred inflation measure. This has further contributed to the selling interest in AUD/USD.

Retail Sales Data and US PCE Figures Influence Market Sentiment

Australian retail demand remained stagnant as higher interest rates and rising living costs constrained household spending. Conversely, the release of the monthly Personal Consumption Expenditure (PCE) Price Index in the US showed an acceleration. Besides, it is a sign of strengthening the odds of more interest rate hikes by the Fed. These factors have impacted market sentiment and influenced the trading dynamics of AUD/USD.

AUD/USD displayed a recovery from below 0.6530, driven by a decline in the appeal for the USD Index. The approval of raising the US borrowing cap limit and optimism surrounding the US debt ceiling deal added strength to the pair’s rebound. However, upcoming data on Aussie inflation and the US Nonfarm Payrolls (NFP) report will continue to shape market sentiment and determine the currency pair’s trajectory.

Technical Analysis Indicates Hurdles for AUD/USD Recovery

The ongoing recovery of AUD/USD is facing challenges, making the AUD-USD forecast uncertain. While the currency pair has shown resilience in bouncing off the multi-day low and exhibiting upward momentum, it still faces significant hurdles. One notable obstacle is the resistance level around 0.6580, which has been a crucial pivot point dating back to March.

The AUD/USD will need to surpass this level convincingly to establish a sustained recovery and signal a potential shift in market sentiment.

The currency pair’s performance is closely tied to various factors, including economic data releases, monetary policy decisions, and geopolitical developments. Traders and investors will closely monitor upcoming events, such as the release of Australian inflation data. Moreover, the US Nonfarm Payrolls (NFP) report will provide insights into the market outlook.

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