AUD/USD Dips to 0.6370 Amid US Dollar Strength

The AUD/USD pair traded with a subdued tone during Friday’s European session, edging down to 0.6370. The Australian Dollar remains under pressure as the US Dollar gains strength on expectations of a hawkish Federal Reserve (Fed) decision next week. Friday’s session lacked significant market-moving events, keeping the focus on broader fundamentals.

Fundamental Overview

US Developments:
The US Initial Jobless Claims rose to a two-month high of 242K, fueling speculation about possible policy easing by the Fed. However, stronger-than-expected inflation data from the Producer Price Index (PPI) countered these expectations.

• Headline PPI: Increased 3% year-over-year (YoY), up from 2.4%.
• Core PPI: Climbed to 3.4% YoY.

This combination of mixed data kept the US Dollar firm, adding to the pressure on AUD/USD.

Australian Developments:
Australian employment data for November surpassed expectations, with 35.6K jobs added (forecast: 25K) and the unemployment rate falling to 3.9% (forecast: 4.2%). Despite this robust data, the Reserve Bank of Australia (RBA) maintained a dovish stance, expressing confidence in inflation gradually reaching target levels. Market expectations for a February rate cut eased, dropping from 70% to 50%.

Technical Overview

On the technical front, AUD/USD slipped to 0.6370, reflecting persistent bearish sentiment amid US Dollar strength.

• RSI: Near oversold territory at 34, showing mild downward momentum.
• MACD Histogram: Decreasing green bars indicate waning bullish momentum.

Key Levels to Watch:

• Support: Immediate support is seen at 0.6350. A decisive break below this level could pave the way for further losses.
• Resistance: Strong resistance lies at 0.6400, coinciding with a key psychological barrier. A sustained break above 0.6400 could shift the short-term bias to neutral and open the door for a retest of 0.6430.

While AUD/USD remains vulnerable, oversold conditions could trigger a corrective bounce if selling pressure eases. Traders should monitor upcoming US and Australian data, as well as the Fed’s rate decision, for further directional cues.