- Westpac is optimistic about AUD/USD, highlighting that the lack of a clear path to significantly higher US yields.
- Technical indicators, such as the RSI approaching 80, suggest strong buying momentum for AUD/USD.
The AUD/USD and NZD/USD are trending higher due to risk-on flows boosting these currency pairs.
For AUD/USD, on the downside, immediate support could lie at 0.6594, just above the 100 Daily Moving Average. The RSI is almost levelling off at around 80.
Westpac recently highlighted a bullish stance on AUD/USD:
“…there is no clear path to significantly higher US yields at the moment, especially with Powell reiterating that persistent inflation trends prolong restrictive policies rather than suggesting imminent rate hikes. Additionally, there are increasing risks of a weakening job market, as indicated by softer April payrolls and last week’s rise in jobless claims.”
In essence, Powell has tentatively ruled out rate hikes, while Nonfarm Payrolls and other job data have started to soften.
Furthermore, recent US CPI data revealed that the annual inflation rate eased to 3.4% in April 2024 from 3.5% in March. Although inflation remains stubbornly high, the downward trend may not support USD bulls.
Extra gains might push the AUD/USD to test 0.6700, before approaching the key 0.6750 level.
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