Despite an uptick in Australia’s Retail Sales by 0.3% in Q4, the AUD/USD pair saw a decline, unable to sustain its bullish momentum and hovering around the 0.6520 mark.

The dip is largely attributed to a downturn in the Australian money market, signaling reduced short-term financial activity influenced by economic shifts, interest rate changes, and global economic uncertainties.

Australia’s Economic Indicators and Interest Rate Forecasts

Recent data revealed a decrease in Australia’s December AiG Industry Index, indicating potential economic challenges. However, the Retail Sales growth in Q4 provides a glimmer of hope. Looking forward, the Commonwealth Bank of Australia anticipates a 75 basis point cut in the benchmark interest rate throughout 2024, starting in September.

This forecast raises concerns over Australia’s economic trajectory and could influence the AUD/USD exchange rate.

China’s Economic Data and Impact on AUD/USD

China, a crucial trading partner for Australia, reported a modest increase in its January CPI by 0.3%, yet the annual CPI saw a significant drop of 0.8%. These figures, coupled with a decline in the Producer Price Index, hint at deflationary pressures in China, potentially affecting the Australian Dollar due to the intertwined economies.

US Dollar Faces Pressure Amid Rate Hike Speculations

The US dollar is on a downtrend amidst market optimism and ahead of the upcoming CPI data. Dallas Fed President Lorie Logan’s remarks on the unnecessary immediate interest rate cuts further fuel uncertainty.

Additionally, a decrease in US Initial and Continuing Jobless Claims suggests a cautious approach towards interest rate decisions, possibly weakening the US dollar’s stance against the Australian counterpart.

In conclusion, while Australia’s retail sales present a positive outlook, broader economic concerns and international factors weigh heavily on the AUD/USD pair, fostering a cautious market sentiment.

AUD/USD Price Forecast: Technical Outlook

The AUD/USD pair exhibits slight bearish tendencies, having declined by 0.06% to trade at 0.65163. The currency navigates below its pivot point at 0.6532, indicating potential for further downside movement.

Resistance levels are established at 0.6562, 0.6603, and 0.6649, which the Aussie needs to overcome to shift the bearish sentiment. Conversely, support is found at 0.6504, with additional levels at 0.6481 and 0.6453, potentially halting further declines.

The Relative Strength Index (RSI) stands at 49, suggesting a neutral market sentiment. However, a descending triangle pattern near the $0.6528 level hints at resistance, reinforcing the bearish outlook below the pivot point of $0.6532.

This technical setup suggests cautious trading, with the AUD/USD’s direction likely influenced by its ability to breach key technical thresholds.