AUD/USD. Analysis and Forecast

[Ben Graham]

The AUD/USD pair has fallen to around 0.6550 at the moment, declining by 0.40% for the day. The exchange rate is under pressure from the U.S. dollar's recovery, following a positive meeting between U.S. and Chinese leaders — Donald Trump and Xi Jinping — held on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea.

The agreement between the two countries establishes a one-year trade truce, under which U.S. tariffs on Chinese imports have been reduced from 57% to 47%. Both sides also committed to resume purchases of U.S. soybeans and to facilitate the export of rare earth metals to the United States. This diplomatic progress has eased fears of a prolonged trade war, thereby boosting confidence in the U.S. dollar.

At the same time, the Federal Reserve lowered the key interest rate by 25 basis points, to a 3.75%–4.00% range. Moreover, the Fed announced the end of its quantitative tightening (QT) program as of December 1. However, Fed Chair Jerome Powell's remarks were perceived as more hawkish than expected: he stated that another rate cut is "not predetermined", emphasizing the difficulty of balancing inflation control and employment support. These comments drove U.S. Treasury yields higher and strengthened the dollar.

For better trading opportunities, attention should turn to Friday's release of Australia's Producer Price Index (PPI) for Q3, as well as to the Manufacturing and Non-Manufacturing PMI data from China's National Bureau of Statistics (NBS) for October. These indicators could influence the Australian dollar's performance, given Australia's strong trade dependence on China.

From a technical standpoint, oscillators on the daily chart are mixed, and the pair has shown resilience below the confluence of the 100-day SMA and the 9- and 14-day EMAs. The next support lies at 0.6550, above which the pair faces resistance near the key 0.6600 level. If prices manage to stay above current levels, AUD/USD could break through the 0.6600 level. If prices fail to hold above the moving averages' confluence, the pair is likely to retreat toward the 0.6500 psychological level.

Below is a table showing percentage changes in the Australian dollar's exchange rate against major currencies for today. The Australian dollar performed best against the Japanese yen.

The material has been provided by InstaForex Company - www.instaforex.com