Recent data shows that the CB Consumer Confidence Index fell below 100 for the first time since July 2022. The drop is primarily attributed to consumer concerns about inflation. This decline in consumer confidence could have significant implications for the financial markets, particularly in the realm of currency trading.
Investors are advised to closely monitor commentary from FOMC members, as their remarks on inflation, the economic outlook, and the timing of Fed interest rate cuts could impact market sentiment. Notable members, such as Lisa Cook and Michelle Bowman, are scheduled to speak in the near future. Additionally, the upcoming Australian and US inflation numbers will be key determinants of the AUD/USD trends.
In the event of an increase in Australian inflationary pressures and a decrease in US inflation, the balance of monetary policy divergence may shift in favor of the Australian dollar. This could potentially lead to a rise in the AUD/USD pair, with expectations of an RBA rate hike and a Fed rate cut fueling this movement. Currently, the AUD/USD pair remains above the 50-day and 200-day EMAs, pointing towards a bullish trend.
From a technical perspective, a breakout above the $0.67003 resistance level could pave the way for a move towards the $0.67500 handle. Further upward momentum could see the bulls targeting the $0.67967 resistance level. Conversely, a drop below the $0.66500 support level may indicate a bearish trend, potentially leading to a breach of the 50-day EMA. This could bring the 200-day EMA and the $0.65760 support level into consideration.
Given the current market dynamics, it is crucial for investors to pay close attention to Australian and US consumer confidence numbers, as well as upcoming Fed commentary. These factors will play a pivotal role in shaping the future direction of the AUD/USD pair. With a 14-period Daily RSI reading of 53.57, there is a possibility that the AUD could rally towards the $0.67500 handle before reaching overbought levels.