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AUD to USD Forecast: How Aussie Responds to RBA’s Stance and US Housing Sector Data

By:
Bob Mason
Updated: Sep 18, 2023, 22:29 GMT+00:00

Aussie dollar’s dance with key resistance levels reveals deeper economic narratives; RBA and FOMC decisions take center stage.

AUD to USD Forecast

In this article:

Highlights

  • The Aussie dollar rebounds from Friday’s 0.18% loss, showcasing Monday’s gains.
  • RBA Meeting Minutes await, hinting at deeper insights into current economic sentiments.
  • US housing sector data in limelight, yet Fed rate moves remain the prime focus.

Monday Overview

On Monday, the AUD/USD gained 0.14%. Reversing a 0.18% loss from Friday, the Aussie dollar ended the day at $0.64368. The Aussie dollar fell to a low of $0.64237 before rising to a high of $0.64489.

RBA in the Spotlight

The RBA avoided surprising the markets this month, leaving the cash rate unchanged at 4.1%. According to the Rate Statement, global economic uncertainties, Australian household spending, and inflation forecasts left the RBA in a holding pattern.

This morning, the RBA Meeting Minutes will shed more light on the decision to leave the cash rate at 4.1%. Board member sentiment toward the economic and inflation outlooks and impact on cash rates will draw investor interest.

Hints of an RBA’s willingness to push the cash rate higher at the expense of the Australian economy would deviate from market expectations.

US Housing Sector Numbers to Play Second Fiddle to the Fed

US building permits and housing starts will be in focus this afternoon. However, the numbers are unlikely to influence bets on Fed interest rate moves, barring an unexpected slump in permits and housing starts.

The US housing sector gives investors a litmus test of the US economy. Deteriorating housing sector conditions would impact consumer confidence and consumption. A slide in consumption would materially affect the US economy. US private consumption accounts for more than 65% of US GDP.

Economists forecast building permits and housing starts to fall in August. Modest declines are unlikely to distract investors from the Fed interest rate decision and economic projections.

Short-Term Forecast

The RBA meeting minutes and FOMC economic projections could tilt monetary policy divergence more toward the US dollar. Recent Australian and US economic indicators suggest the Fed is more likely to delay rate cuts.

AUD/USD Price Action

Daily Chart

The AUD/USD sat below the $0.64900 resistance level. Significantly, the AUD/USD remained below the 50-day and 200-day EMAs, reaffirming bearish price signals. A break above the $0.64900 resistance level would give the bulls a run at the 50-day EMA.

However, failure to break above the $0.64900 resistance level would support an AUD/USD move to the $0.63854 support level. A break below the $0.63854 support level would bring the trend line into view.

AUD/USD movement will hinge on the RBA meeting minutes. Dovish minutes would leave the $0.63854 support level in play.

The RSI reading of 46.68 signals an AUD/USD move to the $0.63854 support level before entering oversold territory.

AUD to USD Daily Chart sends bearish price signals.
AUDUSD 190923 Daily Chart

4-Hourly Chart

The AUD/USD hovers above the 50-day EMA, sending short-term bullishness, but sits below the 200-day EMA, reflecting long-term bearishness.

An AUD/USD breakout from $0.6450 would support an AUD/USD move to the 200-day EMA. A break above the 200-day EMA would bring the $0.64900 resistance level into play.

However, a break below the 50-day EMA would signal an AUD/USD move toward the $0.63854 support level. The RBA meeting minutes will influence the buyer appetite for the AUD/USD ahead of the Fed interest rate decision and economic indicators.

The 14-period 4-Hourly RSI at 51.70 signals an Aussie dollar move to the 200-day EMA before entering overbought territory.

4-Hourly Chart sends bullish near-term price signals.
AUDUSD 190923 4-Hourly Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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