Economists are predicting that the Core PCE Price Index will rise by 2.8% year-on-year in April, following a similar increase in March. Alongside this, personal income and spending are expected to see a 0.3% increase in April. These figures come after a 0.5% rise in personal income and a 0.8% increase in spending during March. It is important to note that a prolonged period of higher interest rates imposed by the Federal Reserve could lead to higher borrowing costs and a reduction in disposable income. This downward trend in disposable income has the potential to impact consumer spending, thereby dampening inflationary pressures driven by demand.
Investors are advised to closely monitor how FOMC members respond to the US Personal Income and Outlays Report. The near-term trajectory of the AUD/USD currency pair is likely to be influenced by data such as the PMI numbers from China and the US Personal Income and Outlays Report. Positive results from China could boost demand for the Australian dollar, while a strong showing in the US Report may deflate expectations of a September rate hike by the Fed, thereby affecting the AUD/USD exchange rate.
The AUD/USD pair is currently trading above its 50-day and 200-day Exponential Moving Averages (EMAs), signaling a bullish trend. If the Australian dollar manages to climb back to the $0.66500 level, it could potentially challenge the $0.67003 resistance level. Breaking above this resistance could propel the currency pair towards the $0.67500 mark. However, a breach below the 50-day EMA could bring the 200-day EMA and the $0.65760 support level into play. This support level is reinforced by the confluence with the 200-day EMA. The current 14-period Relative Strength Index (RSI) reading of 53.59 suggests that the AUD/USD pair may have room to climb towards the $0.67500 level before reaching overbought conditions.
While economic forecasts and market reactions play a crucial role in determining the direction of the AUD/USD pair, technical analysis provides valuable insights into potential price movements. Investors and traders should consider a combination of fundamental data and technical indicators to make informed decisions in the forex market.