AUD/USD Susceptible to Negative Slope in 50-Day SMA

US Dollar Outlook: AUD/USD

AUD/USD holds below the 50-Day SMA (0.6327) as it extends the decline from the start of the week, and the exchange rate may continue to give back the advance from the monthly low (0.6131) should it track the negative slope in the moving average.

AUD/USD Susceptible to Negative Slope in 50-Day SMA

AUD/USD starts to carve a series of lower highs and lows as it slips to a fresh weekly low (0.6237), with the recent weakness in the exchange rate pulling the Relative Strength Index (RSI) back from its highest reading since October.

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In turn, the RSI may show the bullish momentum abating as it falls toward oversold territory, but developments coming out of Australia may influence AUD/USD as the Reserve Bank of Australia (RBA) retains a restrictive policy.

Australia Economic Calendar

The update to Australia’s Consumer Price Index (CPI) may encourage the RBA to keep the cash rate on hold as the headline reading is expected to increase to 2.5% in December from 2.3% per annum the month prior, and signs of persistent price growth may generate a bullish reaction in the Australian Dollar as ‘sustainably returning inflation to target within a reasonable timeframe remains the Board’s highest priority.’

With that said, AUD/USD may face increased volatility ahead of the Federal Reserve interest rate decision as on January 29 as Governor Michele Bullock and Co. continue to combat inflation, but a softer-than-expected CPI print may drag on the Australian Dollar as it fuels speculation for an RBA rate-cut in 2025.

AUD/USD Price Chart – Daily

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

AUD/USD starts to carve a series of lower highs and lows after struggling to close above 0.6318 (November 2023 low), and lack of momentum to hold above the 0.6240 (61.8% Fibonacci extension) to 0.6270 (2023 low) zone may push the exchange rate towards the monthly low (0.6131).
A break/close below the 0.6130 (23.6% Fibonacci retracement) to 0.6170 (2022 low) region opens up the April 2020 low (0.5980), but AUD/USD may continue to gut check the negative slope in the 50-Day SMA (0.6327) should it retrace the decline from the weekly high (0.6315).
A close above 0.6318 (November 2023 low) may push AUD/USD above the moving average for the first time since October, with the next area of interest coming in around 0.6380 (78.6% Fibonacci retracement) to 0.6410 (50% Fibonacci extension).

Additional Market Outlooks

USD/JPY Outlook Hinges on Federal Reserve Rate Decision

GBP/USD Breaks Above Weekly Range to Eye Monthly High

USD/CAD Remains Vulnerable to Trump Trade Policy Ahead of Fed Meeting

Gold Price Rally Fizzles to Keep RSI Below Overbought Zone

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong

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