Audusd Struggles Near Resistance

Audusd Struggles Near Resistance by Adam Rosen last updated on October 07, 2023

AUD/USD Struggles Near The 0.6500 Resistance

After approaching the 0.6500 resistance level, the momentum in the AUD/USD has stalled due to numerous reasons. The first one is the strength of the DXY, which is now trading near the 105.66 level already.

From the US side, the S&P 500 is showing bullish momentum, and so are the other indices. This is an indication that investors now prefer riskier assets like stocks due to improved risk sentiment. In addition, the investors have now also accepted a global slowdown as part of the business.

Furthermore, the core PCE index caused the US bond yields to drop lower and reach the 4.51% level. Over all, all of these things have stalled the AUD advance against the USD.

Core PCE (Monthly) Up by 0.2%

The core PCE reading for the month jumped by 0.1% during August, while the last's month jump was 0.2%. The annual PCE reading turned lower and touched the 3.9% level against the last reading of around 4.3%. This means the Fed has now more time to evaluate how the interest rates are impacting the economy.

In the next few weeks, the US PMI (manufacturing) for the month of September will be the main focus. According to the forecast, the PMI for the manufacturing index is expected to go down just like it did during the last 11 months.

On the Australian side, the RBA decision is an important one for the AUD/USD as it will decide the next move of the AUD. According to economists, the interest rate in Australia will remain near 4.10% with no change at all.

By the end of 2023, the interest rate will touch 4.35%, which is considered to be the peak by many economists. After that, the only viable direction will be the downside (rate cuts). However, the Federal Reserve is also expected to go through the same route starting from next year.

This means the central bank which is more quick to lower the interest rate will be the one to enjoy a quicker economic recovery.