Welcome to Extreme Investor Network, where we provide expert insights and analysis on the stock market, trading, and all things Wall Street. Today, we are diving into the recent US Job Report and its potential impact on the market.
The recent US Job Report has sparked expectations of a pickup in hiring, which could support wage growth and ultimately increase disposable income. This boost in disposable income may fuel consumer spending, leading to demand-driven inflation. As a result, we may see a higher-for-longer Fed rate path to raise borrowing costs and reduce disposable income.
Looking ahead, investors will be closely monitoring the upcoming US CPI Report on Wednesday and the Fed interest rate decision, economic projections, and press conference. With the recent increase in wage growth, hotter-than-expected inflation numbers could significantly impact investor expectations of multiple 2024 Fed rate cuts.
In terms of short-term forecast, the near-term trends of AUD/USD will be heavily influenced by the US CPI Report and FOMC economic projections. Hotter-than-expected US inflation numbers and hawkish adjustments may tilt monetary policy divergence toward the US dollar.
Turning our attention to the AUD/USD Price Action on the daily chart, we see that the pair is currently hovering above the 50-day and 200-day EMAs, signaling bullish price movements. If the AUD/USD manages to break through the $0.66500 handle, we could see a run at the $0.67003 resistance level. A further breakout above this resistance level could bring the $0.67500 handle into play. However, Australian business confidence numbers and investor sentiment toward the Fed rate path should also be taken into consideration.
On the flip side, a fall through the 50-day EMA could give the bears an opportunity to test the 200-day EMA and the $0.65760 support level. A break below the $0.65760 support level could indicate a potential drop to the $0.65500 handle. With the 14-period Daily RSI reading at 48.64, there is a possibility that the AUD may break below the $0.65500 handle before entering oversold territory.
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