AUD/USD Outlook: Aussie Climbs on Improved Risk Appetite

• The US will work to prevent contagion in the banking sector and protect bank deposits.

• Australia’s retail sales increased barely 0.2% in February.

• Australia’s consumer inflation is expected to have decreased to 7.1% in February. 

Today’s AUD/USD outlook is bullish. The Aussie gained as risk appetite improved amid calm in the banking sector. According to Nellie Liang, Treasury undersecretary, the US government will continue using its resources to stop contagion in the banking industry and protect Americans’ deposits.

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Australian retail sales stabilized in February following erratic fluctuations throughout the year-end holidays. This is a sign of reduced spending amid high living and borrowing costs. 

Retail sales increased barely 0.2% in February, according to a report released by the Australian Bureau of Statistics on Tuesday, compared to a revised 1.8% increase in January. 

The data demonstrated that Australian consumers are unmistakably slowing their purchases, with retail sales volumes likely declining due to price increases. This supported the case for a rate pause by the Reserve Bank of Australia at its April policy meeting.

According to RBA Governor Philip Lowe, the bank is approaching stopping rate increases since monetary policy is in restrictive territory. Depending on the data, a pause in policy might occur as early as April.

Another deciding aspect could be the monthly inflation figures that will be made public on Wednesday.

According to analyst predictions, consumer inflation is expected to have decreased from 7.4% in January to 7.1% in February.

AUD/USD key events today

Investors will receive data on consumer confidence from the US. This will show the confidence level in economic activity and is a leading indicator of consumer spending.

AUD/USD technical outlook: Bulls approaching the 0.6700 hurdle

The 4-hour chart shows AUD/USD trading above the 30-SMA and the RSI above 50, signs that the current move is bullish. This follows a bounce from the 0.6625 support and a break above the SMA that signified a shift in sentiment. The RSI also crossed above 50, pointing to strong bullish momentum.

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However, this bullish move might not go much further as the price is approaching strong resistance at 0.6700. A break above this level would mean retesting the 0.6750 resistance. If the resistance holds firm, the price will return to 0.6625 support.

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