AUD/USD Susceptible to Failed Test of 50-Day SMA

AUD/USD Outlook

The recent rebound in AUD/USD appears to be stalling ahead of the 50-Day SMA (0.6663) as it struggles to extend the series of higher highs and lows from last week, and the Reserve Bank of Australia (RBA) interest rate decision may do little to prop up the exchange rate as the central bank is anticipated to retain the current policy.

AUD/USD Susceptible to Failed Test of 50-Day SMA

AUD/USD attempts to retrace the decline from the May high (0.6818) after registering a fresh yearly low (0.6459) last week, and the opening range for June may set the stage for larger recovery if the exchange rate manages to hold above the monthly low (0.6485).

Join David Song for the Weekly Fundamental Market Outlook webinar. Register Here

FOREX.com Economic Calendar

However, the RBA meeting may drag on AUD/USD as the central bank is expected to keep the Official Cash Rate (OCR) at 3.85% in June, and it remains to be seen if Governor Philip Lowe and Co. will endorse a wait-and-see approach over the coming months as the Board plans to follow a ‘narrow path on which inflation comes down steadily and the unemployment rate increases but remains below pre-pandemic levels.’

In turn, AUD/USD may broadly track the negative slope in the 50-Day SMA (0.6663) as the RBA seems to be at or nearing the end of its hiking-cycle, but the central bank may take additional steps to combat inflation as ‘inflation was not expected to reach the top of the target band until mid-2025.’

Source: ASX

As a result, another unexpected rate hike may generate a bullish reaction in the Australian Dollar as the ASX RBA Rate Indicator shows a greater than 60% probability for ‘No Change,’ and AUD/USD may attempt to further retrace the decline from the May high (0.6818) if Governor Lowe and Co. keep the door open to implement higher interest rates.

With that said, AUD/USD may try to trade back above the 50-Day SMA (0.6663) as long as it holds above the monthly low (0.6485), but the exchange rate may track the negative in the moving average if it struggles to push above the indicator.

Australian Dollar Price Chart – AUD/USD Daily

Chart Prepared by David Song, Strategist; AUD/USD on TradingView

AUD/USD stages a three-day advance after trading to a fresh yearly low (0.6459) at the end of May, and the exchange rate may trade back above the 50-Day SMA (0.6663) as it looks poised for another close above the 0.6600 (23.6% Fibonacci retracement) handle.
A break/close above 0.6660 (50% Fibonacci retracement) raises the scope for a move towards the 0.6780 (38.2% Fibonacci retracement) to 0.6820 (23.6% Fibonacci retracement) region, but AUD/USD may track the negative slope in the moving average if it fails to push back above the indicator.
A close below the 0.6600 (23.6% Fibonacci retracement) handle may push AUD/USD back towards the 0.6510 (38.2% Fibonacci retracement) to 0.6550 (61.8% Fibonacci retracement) area, with the next region of interest coming in around the May low (0.6459).

Additional Market Outlooks

USD/JPY Post-NFP Rebound Puts June Opening Range in Focus

Gold Price Rebound Brings Test of 50-Day SMA

--- Written by David Song, Strategist

Follow me on Twitter at @DavidJSong

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.