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    AUD/USD Price Analysis: Corrects from 0.6600 as US Dollar finds temporary support

    Source Fxstreet
    Feb 22, 2024 13:41
    • AUD/USD falls vertically from 0.6600 as the US Dollar gets a firm footing.
    • Deepening geopolitical tensions have improved safe-haven appeal.
    • Fed policymakers are less likely to cut interest rates soon.

    The AUD/USD pair falls sharply after a steep rally to the round-level resistance of 0.6600 in the early New York session on Thursday. The Aussie asset faces a sell-off as the US Dollar has rebounded amid deepening Middle East tensions.

    The Israeli army has intensified bombarding on Rafah, the southern region of Gaza in Palestine, as the former hopes that over 1.4 million refugees have been sheltered there. Escalating Middle East tensions have improved the appeal for safe-haven assets.

    Meanwhile, the Federal Open Market Committee (FOMC) minutes for January’s policy meeting indicated that policymakers don’t want to cut interest rates early amid lack of conviction on the progress in inflation declining to the 2% target.

    The Australian Dollar remains bullish lately as the Reserve Bank of Australia (RBA) minutes for February policy meeting indicated that policymakers were interested in raising the Official Cash Rate (OCR) further. It indicates that the current monetary policy of the RBA is not sufficiently restrictive to tame sticky price pressures.

    Going forward, investors will focus on the United States preliminary S&P Global PMI data for February, which will be published at 14:45 GMT.

    AUD/USD strengthens after a breakout of the Falling Pennant chart pattern formed on a four-hour scale. A breakout of the aforementioned pattern indicates a bullish reversal. The breakout of a Falling Pennant happens when selling pressure dries, and investors consider it a value-buy.

    The 20-period Exponential Moving Average (EMA) near 0.6550 continues to provide support to the Australian Dollar bulls.

    The 14-period Relative Strength Index (RSI) struggles to sustain in the 60.00-80.00 region. A bullish momentum would trigger if the RSI (14) manages to do so.

    Fresh upside would appear if the asset breaks above the round-level resistance of 0.6600, which will drive the asset towards January 30 high at 0.6625, followed by December 4 high at 0.6688.

    In an alternate scenario, a downside move below February 15 low at 0.6477 would activate sellers and will expose the asset to February 13 low at 0.6443 and the round-level support of 0.6400.

    AUD/USD four-hour chart

     

     

    Disclaimer: For information purposes only. Past performance is not indicative of future results.
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