- US business activity came in weaker than expected.
- Investors are awaiting Powell’s speech at Jackson Hole.
- In the charts, bulls are trying to take over.
Today’s AUD/USD outlook is bullish as the pair will likely extend Tuesday’s gains. The Australian dollar spiked higher on Tuesday following the publication of weaker-than-expected data on US business activity. Still, gains were very modest, and prices dropped late yesterday and early today due to further hawkish comments from a Fed member.
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Price volatility is anticipated to last until the Federal Reserve’s interest rate decision on September 21. Jerome Powell, the chairman of the Federal Reserve, will deliver the keynote address on Friday in Jackson Hole, Wyoming. His remarks may provide insight into how the Federal Open Market Committee (FOMC) will vote.
After leaning toward the massive hike earlier in the week, the trader mood is split ahead of Powell’s address at the central bankers’ symposium in Jackson Hole. The probability of a rate increase of 50 and 75 basis points, respectively, is 50%, according to the carefully observed FedWatch Tool.
The US manufacturing and services PMI came in well below estimates on Tuesday, which raises questions about the economy’s health and supports the idea that Powell may give a speech advocating a slower rate of interest rate increases.
Conversely, Powell might follow several Fed members and advocate for the continuation of aggressive rate hikes. This includes Neel Kashkari, the president of the Minneapolis Federal Reserve Bank. He stated on Tuesday that his most significant concern is that the US central bank will underestimate the scope and persistence of price pressures.
AUD/USD key events today
AUD/USD investors will pay attention to economic data from the United States, including core durable goods and pending home sales. These will give further clues on the health of the US economy.
AUD/USD technical outlook: Bulls fighting to maintain the new uptrend
The 4-hour chart shows the price trading above the 30-SMA after a candle with massive momentum broke above the SMA. This break is a sign that bulls are challenging the downtrend.
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However, to maintain this new downtrend, bulls must use the 30-SMA as support and push beyond resistance at 0.69507. If this happens, the next hurdle will be at 0.70362. However, if bears return, the price will likely retest support at 0.68751.
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Saqib Iqbal
