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  • Consumer spending has dropped in Australia due to rising inflation.
  • Australia’s GDP forecasts are expected to drop.
  • Australia’s economy might suffer amid a struggling Chinese real estate market.

Today’s AUD/USD forecast is bearish. According to updated forecasts that Treasurer Jim Chalmers will present in Tuesday’s budget, Australia’s economic growth is anticipated to decline significantly over the upcoming fiscal year as rising inflation restrains consumer spending.

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The gross domestic product (GDP) estimates for the 2023–2024 fiscal year will be reduced from the 2.5% forecast made in April to 1.5% in the budget documents. Additionally, the GDP is expected to decline from 3.5% to 3.25% in 2022–2023. The drop is attributed to a decline in consumer spending as rising costs and interest rates squeezed household budgets.

Officials are also concerned that a slowing global economy, particularly the struggling Chinese real estate market, may harm Australia’s growth when unemployment is at its lowest level since the 1970s.

“While we have plenty of things going for us, Australians have not been immune from rampant global inflation, heightened uncertainty, and cost of living pressures here at home,” Chalmers said in a statement on Monday.

“These headwinds will inevitably impact our growth outlook, and Australians are already feeling the pinch from higher prices and rising interest rates.”

Budget relief is expected from record commodity prices and a flourishing labor market, and analysts predict that the deficit will decrease.

Chalmers, however, has frequently reminded Australians to expect a “responsible budget” and said that the government could only offer limited cost-of-living assistance out of concern that it would add stimulus that would conflict with the Reserve Bank of Australia’s rate hikes.

AUD/USD key events today

Investors expect the S&P Global PMI report for the United States to show the purchasing managers’ activity level.

AUD/USD technical forecast: Bullish above 30-SMA

AUD/USD forecast

Looking at the 4-hour chart, we see the price trading above the 30-SMA and the RSI above 50, showing bulls have control. Bulls took over with a big-bodied candle that broke above the 0.6325 key resistance level.

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Currently, the price has pulled back to retest this level and the 30-SMA as support. The bullish trend will continue if the price finds support at the SMA. However, if it breaks and closes far below, bears might return to retest support at 0.6200.

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