The US Dollar (USD) lost momentum on Tuesday, reversing some of Monday's gains and moving closer to key support levels around 106.00, as measured by the Dollar Index (DXY). Meanwhile, the Australian Dollar (AUD) bounced back slightly, recovering some earlier losses, although it remained below the 0.6500 mark during sideways trading.
Rising export prices for key commodities like copper and iron ore supported the Aussie's recovery despite ongoing concerns about China's struggling economy and the effectiveness of its stimulus measures. While Australia benefits from strong commodity exports, uncertainties about China's economic slowdown remain challenging, as the two economies are closely linked.
The Reserve Bank of Australia (RBA) has kept interest rates steady at 4.35%, prioritizing inflation control while being cautious about the country's slowing economic growth. RBA Governor Michele Bullock emphasized that monetary policy will stay tight until inflation consistently cools. While inflation improved in October, the RBA clarified that one good report doesn't signal a trend, and rate cuts still need to be on the horizon.
The Australian Dollar could gain if the US Federal Reserve starts cutting rates, but challenges like global inflation and a strong US Dollar persist. Despite concerns, Australia's labor market remained stable in October, with unemployment at 4.1% and 16,000 new jobs added. Experts predict the RBA might consider rate cuts in mid-2025, but only if inflation continues to decline steadily.
AUDCAD – W1 Timeframe
The most recent break of structure, highlighted on AUDCAD's weekly timeframe chart, is bullish. The price is currently approaching the weekly timeframe pivot region and trendline support. Now, we can check the daily timeframe for more clues.
D1 Timeframe
The daily timeframe does not present much new information aside from showing the demand zone for the anticipated price reaction a bit clearer. The long-wicked pin bar candle is the demand zone, which can be further streamlined using the 88% Fibonacci retracement level as a critical reversal point.
Analyst's Expectations:
Direction: Bullish
Target: 0.93037
Invalidation: 0.88682
CONCLUSION
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