The AUD/USD currency pair is nearing the November 2023 low of 0.6318, erasing gains made earlier this week. The Federal Reserve’s upcoming interest rate decision could significantly influence the exchange rate, with the central bank expected to further ease its restrictive monetary stance.
AUD/USD Nears Monthly and Annual Lows
AUD/USD has fallen to a fresh monthly low of 0.6333, forming a pattern of lower highs and lows. The pair continues to trade below its 50-day Simple Moving Average (SMA) of 0.6545, which maintains a negative slope. A sustained breach below the November 2023 low (0.6318) could expose the annual low of 0.6270 and possibly extend declines toward 0.6240, aligning with the 61.8% Fibonacci extension level.
Federal Reserve’s Role in Market Direction
The Federal Open Market Committee (FOMC) is widely expected to cut interest rates by 25 basis points during its final meeting of 2024. The central bank’s acknowledgment of higher unemployment compared to a year ago may signal a gradual shift toward a neutral policy stance in 2025. This dovish outlook could weigh on the US dollar, creating potential headwinds for the Greenback against the Australian dollar.
However, if the Fed adopts a more hawkish tone despite the rate cut, AUD/USD could remain under pressure. Updated forecasts from Fed Chair Jerome Powell and his team might highlight a cautious approach to unwinding restrictive policies, potentially supporting bearish momentum in AUD/USD.
Technical Outlook for AUD/USD
A failure to test the November 2023 low of 0.6318 could interrupt the bearish trend in AUD/USD. Conversely, a close below the 2023 low of 0.6270 would bring the next support zone around 0.6130 (23.6% Fibonacci retracement) into focus.
For the pair to shift its current trajectory, AUD/USD needs a decisive close above the 0.6380 to 0.6410 zone, which includes significant Fibonacci retracement levels. This could open the door for a move toward the monthly high of 0.6515 and potentially target the 0.6590 to 0.6600 range.
Broader Market Considerations
- USD/CAD: The pair is pulling back but remains below overbought RSI territory.
- EUR/USD: Attempts to stabilize after five consecutive days of losses.
- USD/JPY: Continues a five-day rally, marking the first such streak since June.
- Gold Prices: Remain subdued, trading below levels seen before the U.S. election.
With these dynamics in play, traders are advised to monitor key support and resistance levels closely, as well as any shifts in Federal Reserve policy that could alter the trajectory of the US dollar and AUD/USD pair.
