AUDUSD Navigating Key Levels Amid Mixed Signals 

The Australian dollar’s recent performance against the US dollar highlights significant market dynamics driven by technical and fundamental factors. Following a steep decline from its late September peak, the AUDUSD pair has shown tentative signs of recovery, though mixed signals persist. Key resistance and support levels offer insight into potential price movements, while inflation data from Australia and the US provide additional context for market expectations. The interplay between these elements continues to shape the outlook for the currency pair.

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Since reaching its peak at 0.69411 on September 30, the Australian dollar (AUD) has faced significant depreciation against the US dollar (USD), driven by a confluence of technical indicators pointing to sustained bearish momentum. Notably, the emergence of a Shooting Star candlestick reversal pattern highlighted the inability of buyers to sustain the uptrend, signaling the start of a downward trajectory.

This decline was further exacerbated by prices breaking below the 20- and 50-period Linear Weighted Moving Averages (LWMAs), a key technical event that reinforced the bearish outlook. Adding to this, the crossover of the shorter 20-period LWMA below the longer 50-period LWMA—a “Death Cross” pattern—intensified the negative momentum. Complementing these developments, both the Momentum Oscillator and the Relative Strength Index (RSI) dipped below their respective baselines of 100 and 50, further validating the downward trend.

By November 26, however, the AUDUSD pair showed signs of recovery, rebounding from the lows of 0.64327 and targeting the swing high at 0.65484. A decisive breakout above this level could act as a catalyst for further upside.

As of now, the technical picture remains mixed. The Momentum Oscillator and the 20-period LWMA suggest upward potential, while the RSI and 50-period LWMA continue to favor a bearish bias. Additionally, the 20-period LWMA remains below the 50-period LWMA, underscoring the uncertainty and lack of clear directional momentum.

If buyers take control of the market, traders may shift their focus to the following four potential resistance levels:

0.65484: The initial price target is established at 0.65484, corresponding to the swing high marked on November 25.

0.66269: The second level of resistance is seen at 0.66269, which aligns with the 38.2% Fibonacci Retracement drawn from the high point, 0.694110, to the low point, 0.64327.

0.66866: The third price target is determined at 0.66866, representing a peak from November 7.

0.67469: An additional price objective is estimated at 0.67469, mirroring the 61.8% Fibonacci Retracement drawn from the high point, 0.694110, to the low point, 0.64327.

If sellers maintain control of the market, traders may focus on the following four key support levels:

0.64327: The initial support level is established at 0.64327, representing the swing low marked on November 26.

0.63749: The second support level is seen at 0.63749, aligning with the 161.8% Fibonacci Extension drawn from the swing low, 0.64392, to the swing high, 0.65433.

0.63518: The third downside target is 0.63518, corresponding to the weekly support, S3, calculated using the standard Pivot Points methodology.

0.62708: An additional downside target is observed at 0.62708, reflecting the 261.8% Fibonacci Extension drawn from the swing low, 0.64392, to the swing high, 0.65433.

Australian inflation came in lower than expected in October, with the headline Consumer Price Index (CPI) rising 2.1% year-over-year, below the forecast of 2.3%. The decline was driven by government rebates that reduced electricity and rental costs, keeping headline inflation within the Reserve Bank of Australia’s (RBA) 2-3% target for three consecutive months.

However, the core trimmed mean inflation, a key measure for the RBA, increased to 3.5% from 3.2%, highlighting persistent inflationary pressures. Despite this, the RBA is expected to hold rates steady at 4.35% in December, maintaining a cautious stance due to global uncertainties and sticky core inflation. Policymakers emphasize the importance of sustainably bringing prices within the target range while monitoring the volatile monthly data.

On the other hand, US PCE inflation slightly accelerated in October, aligning with expectations. Monthly PCE inflation rose to 0.24% from 0.18% in September, while the annual rate increased to 2.3% from 2.1%. Core PCE inflation, the Federal Reserve’s preferred measure, edged up to 0.27% monthly and 2.8% annually. With inflation remaining steady, the Fed is likely to proceed with a quarter-point rate cut in December, with markets estimating a 70% probability.

The Australian dollar’s recent movements against the US dollar reflect a balance of technical and fundamental influences, with mixed signals shaping the outlook. While inflation data and central bank policies from both Australia and the US provide context, the AUDUSD pair’s future direction will depend on how price action interacts with key resistance and support levels. Traders should remain attentive to these levels and broader economic developments to navigate the prevailing uncertainty effectively.