AUDUSD NEXT POSSIBLE MOVE

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AUDUSD
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LONG
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AUDUSD is moving in Ascending channel and market has reached higher low area of the channel

The Australian Dollar (AUD) continued its decline for the second consecutive session on Wednesday. This downward trend in the AUD/USD pair was driven by weaker-than-expected Australian consumer prices, potentially signaling a shift towards a more dovish stance by the Reserve Bank of Australia (RBA) regarding its interest rate trajectory. Consequently, this outlook has placed downward pressure on the AUD.

In February, Australia’s Monthly Consumer Price Index (YoY) increased by 3.4%, which, although consistent with previous levels, fell slightly below the anticipated 3.5%. However, this reading marked the lowest level since November 2021. The AUD faced additional downward pressure following the release of the Westpac Consumer Confidence index on Tuesday, which showed a decline of 1.8% to 84.4 in March 2024 from February’s 86.0, easing from its 20-month highs.

On the other hand, the US Dollar Index (DXY) recorded its second consecutive day of gains amidst a prevailing risk-off sentiment. This sentiment was largely fueled by expectations surrounding the forthcoming release of the US Personal Consumption Expenditures (PCE) report scheduled for Friday. However, the decline in US Treasury yields may be attributed to market expectations concerning potential rate cuts by the US Federal Reserve (Fed). Such sentiment could potentially limit the advances of the US Dollar.

Additionally, Australia’s Westpac Leading Index (MoM) increased by 0.1% in February, reversing the previous month’s decline of 0.09%. Furthermore, Australia’s government has pledged to support a minimum wage increase in line with inflation this year, acknowledging the ongoing challenges faced by low-income families amidst rising living costs.

People Bank of China reported the injection of CNY 100 billion 15.46 billion into the financial system on Monday.

According to a Bloomberg survey of economists, there is a consensus expectation for the People’s Bank of China (PBoC) to implement two additional Reserve Requirement Ratio (RRR) cuts in 2024, totaling a reduction of 50 basis points. Moreover, Chinese President Xi Jinping is scheduled to meet with US business leaders, following up on his November dinner with US investors in San Francisco.

Regarding US monetary policy, Atlanta Fed President Raphael Bostic expressed his expectation for only one rate cut this year, cautioning against reducing rates prematurely, which could potentially lead to greater disruption. Conversely, Chicago Fed President Austan Goolsbee aligns with the majority of the board in anticipating three cuts. However, Goolsbee emphasized the need for further evidence indicating a decrease in inflation before proceeding with rate cuts.

In terms of economic indicators, US Durable Goods Orders increased by 1.4% in February, surpassing the expected 1.3% and reversing the previous month’s decline of 6.9%. Similarly, US Durable Goods Orders excluding Defense rose by 2.2% in February, compared to the expected 1.1%, and the previous decline of 7.9%. However, the US Housing Price Index (MoM) decreased by 0.1% in January, following December’s increase of 0.1%.