AUD/USD Recovery Pulls RSI Away from Oversold Territory

Australian Dollar Outlook: AUD/USD

AUD/USD trades to a fresh weekly high (0.6638) after showing a limited reaction to the Reserve Bank of Australia (RBA) interest rate decision, and the exchange rate may appreciate over the remainder of the week as the Federal Reserve is expected to deliver a 25bp rate-cut.

AUD/USD Recovery Pulls RSI Away from Oversold Territory

Keep in mind, the recent recovery in AUD/USD kept the Relative Strength Index (RSI) above 30, and the oscillator may continue to show the bearish momentum abating as it moves away from oversold territory.

As a result, AUD/USD may extend the recent series of higher highs and lows going into the Federal Open Market Committee (FOMC) meeting, and the looming decision by Chairman Jerome Powell and Co. may sway the exchange rate as the central bank pursues a neutral stance.

US Economic Calendar

The FOMC may continue to strike a dovish forward guidance even after reducing the benchmark interest rate to a fresh threshold of 4.50% to 4.75% as the central bank ‘projects that the appropriate level of the federal funds rate will be 4.4 percent at the end of this year.’

With that said, indications of a further Fed rate cuts may keep AUD/USD afloat especially as the RBA remains reluctant to switch gears, but the exchange rate may threaten the bullish price series should the central bank show a greater willingness to keep US interest rates on hold at its last meeting for 2024.

AUD/USD Price Chart – Daily

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

• The opening range for November is in focus for AUD/USD as it trades back above the 0.6590 (38.2% Fibonacci extension) to 0.6600 (23.6% Fibonacci retracement) zone, with a break/close above 0.6740 (38.2% Fibonacci retracement) opening up the 0.6810 (23.6% Fibonacci extension) to 0.6820 (23.6% Fibonacci retracement) region.
• Next area of interest comes in around 0.6870 (38.2% Fibonacci retracement) but AUD/USD may snap the recent series of higher highs and lows if it struggles to hold above the 0.6590 (38.2% Fibonacci extension) to 0.6600 (23.6% Fibonacci retracement) zone.
• Failure to hold above the October low (0.6537) brings the 0.6510 (38.2% Fibonacci retracement) to 0.6520 (23.6% Fibonacci retracement) region back on the radar, with the next area of interest coming in around 0.6380 (78.6% Fibonacci retracement) to 0.6410 (50% Fibonacci extension).

Additional Market Outlooks

Monetary vs Fiscal Policy: Implications for FX Markets

USD/CAD Reverses Ahead of 2022 High with Fed Rate Decision on Tap

Euro Forecast: EUR/USD Recovery Persists Ahead of Euro Area CPI Report

British Pound Outlook: GBP/USD Recovery Emerges Ahead of UK Budget

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong