Australian Dollar Forecast: AUD/USD Defends 2022 Low

Australian Dollar Outlook: AUD/USD

AUD/USD seems to be defending the 2022 low (0.6170) as it extends the series of higher highs and lows from last week, but the exchange rate may track the negative slope in the 50-Day SMA (0.6432) should it continue to hold below the moving average.

Australian Dollar Forecast: AUD/USD Defends 2022 Low

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

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As a result, AUD/USD may further retrace the decline from the December high (0.6515), and data prints coming out of Australia may keep the exchange rate afloat as the Consumer Price Index (CPI) is anticipated to show sticky inflation.

Australia Economic Calendar

Australia’s CPI is anticipated to increase to 2.2% in November from 2.1% per annum the month prior, and a signs of persistent price growth may encourage the Reserve Bank of Australia (RBA) to further combat inflation as ‘monetary policy would need to be sufficiently restrictive until members are confident that inflation is moving sustainably towards target.’

In turn, a rise in the CPI may generate a bullish reaction in the Australian Dollar as it encourages the RBA to retain the current policy at its first meeting for 2025, but a weaker-than-expected inflation reading may curb the recent rebound in AUD/USD as it puts pressure on Governor Michele Bullock and Co. to alter the course for monetary policy.

With that said, speculation for a looming shift in RBA policy may curb the recent recovery in AUD/USD, but the exchange rate may continue to defend the 2022 low (0.6170) should it extend the bullish price series from last week.

AUD/USD Price Chart – Daily

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

AUD/USD trades to a fresh monthly high (0.6302) as it stages a three-day rally, with a move back above the November 2023 low (0.6318) raising the scope for a move towards the 0.6380 (78.6% Fibonacci retracement) to 0.6410 (50% Fibonacci extension) zone.
A move above the 50-Day SMA (0.6432) opens up the 0.6510 (38.2% Fibonacci retracement) to 0.6520 (23.6% Fibonacci retracement) region, but the exchange rate may track the negative slope in the moving average as long as it holds below the indicator.
Lack of momentum to close above the 0.6240 (61.8% Fibonacci extension) to 0.6270 (2023 low) area may curb the bullish price series, and failure to defend the 0.6130 (23.6% Fibonacci retracement) to 0.6170 (2022 low) zone may push AUD/USD towards 0.5990 (78.6% Fibonacci extension) to 0.6020 (50% Fibonacci extension) region.

Additional Market Outlooks

US Dollar Forecast: USD/CHF Pulls Back Ahead of 2024 High

EUR/USD Halts Three-Day Selloff to Keep RSI Out of Oversold Territory

USD/CAD Rebound Pushes RSI Back Towards Overbought Zone

British Pound Forecast: GBP/USD Pushes Below May Low to Eye 2024 Low

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong

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