Strengthening of the AUD / USD exchange rate pair is expected to be only temporary. Referring to Bloomberg, the pair AUD / USD on Tuesday (25/2) at 15.30 WIB gained 0.18% to 0.6617. On Monday (24/2), the pair was at the level of 0.6605.
Monex Investindo Futures analyst Ahmad Yudiawan sees that the strengthening of the AUD / USD pair in the past two days will not hold the pair's bearish pace. According to him, the strengthening was supported by the weakening of the United States dollar (US) in the past two days.
"This strengthening is likely because market participants are taking profit-taking action against the US dollar. So it makes the US dollar depressed in the last two days which in the end is a positive boost for the Australian dollar, "Yudhi explained to Kontan.co.id, Tuesday (25/2).
Yudhi added, Australia's fundamental conditions so far were also not good so it pressed the Australian currency. The first factor is that the Australian monetary policy is considered to be dovish. Seen from the Reserve Bank of Australia's decision to take a stand to make monetary easing.
Depressed, Limited AUD / USD Increase
"Not to mention at this time, China which is Australia's biggest trading partner is being affected by the coronavirus. The threat of a slowdown in the global economy, the sinking of Australia's trading partners, and a dovish monetary policy tend to weaken the Australian dollar in the past week, "Yudhi added.
While US conditions, Yudi assessed that there has been little pressure so far amid expectations the Fed will cut interest rates because the global economic outlook is threatened to slow down. The interest rate cut is expected as an effort to boost the US economy.
From a technical perspective, the AUD / USD pairing shows a bearish tendency. Moving averages (MA) 50, MA 100, and MA 200 move above the current running price. While the MACD indicator is at the level of minus 0.0016 and minus 0.0021. Then the stochastic is approaching oversold at the h4 timeframe, at the level of 77.20 and the RSI indicates neutral at 58.00.
HFX Futures analyst Ady Pangestu said the rise in the AUD / USD looks limited and under pressure. According to him, the strengthening this week was supported by the release of improved Chinese economic data. China's inflation data was better than expected because China's consumer price index (CPI) in January rose 1.4% every month and 5.4% on an annual basis.
Low Interest Rates, AUD / USD Strengthener
As a result, the positive catalyst boosted the performance of the AUD which is also the Chinese yuan proxy currency. "The atmosphere is calmer in the yuan and talks about the offer of exporters is said to support AUD today," Ady told Kontan.co.id.
In addition to the Bamboo Curtain country economic data, the decision of the Reserve of Bank Australia (RBA) on Tuesday last week to keep interest rates low also contributed to the strengthening of the AUD / USD. RBA announced to keep interest rates at the level of 0.75%. In fact, the decision was following market expectations.
The determination of low-interest rates is inseparable from the optimism of RBA Governor Philip Lowe on the prospects for the Australian economy which will improve this year.
The Fed is also still considering the possibility of easing interest rate policy which is currently under 1.75% given the improved performance of the US economy. Also, wage payment report data for the US in January also rose fantastically. "This pushed the dollar index to move further," he said.
"With these indications, buy recommendations are limited with reference levels of resistance at 0.6750 and 0.6775 levels and support levels at prices of 0.6700 and 0.6660," Ady concluded.
