AUD/USD extended gains for the second consecutive trading day on Monday. Although expectations of the Fed's interest rate cut weakened, overall market risk appetite improved. Meanwhile, investors are eagerly awaiting Australia's April CPI report to be released on Wednesday, hoping to understand the trend of Australia's domestic monetary policy.
Market analyst Akhtar Faruqui said that since the minutes of the RBA's latest meeting showed that it was difficult to predict future changes in cash interest rates, acknowledged that recent data increased the possibility that inflation would continue to rise above the 2%-3% target for a long period of time, and the Australian dollar may rise.
On Friday, the University of Michigan announced consumer inflation expectations for the month of May for 5 years, and the US dollar weakened as a result. The unemployment rate fell slightly to 3.0%, below expectations of 3.1%. Although the consumer confidence index was revised upward from the initial value of 67.4 to 69.1, it is still the lowest level in six months. This data may help strengthen investors' confidence that the Federal Reserve may cut interest rates.
According to CME's Federal Reserve observation tool, the possibility that the Fed will cut interest rates by 25 basis points in September has dropped to 44.9% from 49.0% a week ago. Notably, due to Monday being the Memorial Day bank holiday, the US market will be closed.
The Australian dollar traded around 0.6630 against the US dollar on Monday.The 14-day Relative Strength Index (RSI) is at a level slightly above 50, indicating a bullish trend. Analysis of the daily chart shows that AUD/USD is testing the lower boundary of the rising wedge.A return to the wedge will indicate a strengthening bullish trend.
Market analyst Akhtar Faruqui said that the 9-day exponential moving average (EMA) at 0.6634 and the lower boundary of the rising wedge are direct resistance levels. Breaking through this level could cause AUD/USD to test a four-month high of 0.6713, followed by an ascending triangle's upper limit around 0.6730.
In the downward direction, the mental level of 0.600 can be used as a key support level, followed by 0.6550. Further decline may put downward pressure on AUD/USD and may push it towards the pullback support level of 0.6470.
AUD/USD daily chart
At 13:32 Beijing time on May 27, the Australian dollar was reported at 0.6633/34 against the US dollar