Uptrend resumption is on the cards

• AUD/USD managed to resume its uptrend and briefly break above 0.6900.
• The US dollar extended its weekly rally on geopolitical jitters.
• The Ai Group industry index improved to -18.6 in September.

AUD/USD faced renewed buying interest and broke above the key 0.6900 mark again on Wednesday, all despite another positive day in the US dollar (USD), this time supported by rising tensions in the Middle East .

Indeed, demand for the haven universe remained flat on Wednesday, hurting sentiment around risk assets.

However, the Aussie dollar resisted continuing its northward march into the greenback on the back of decent gains in copper prices and subsequent consolidation in the upper range of iron ore prices, all in response to recently announced stimulus packages aimed at breathing some signs . of life in China’s economy.

On the monetary policy front, the Reserve Bank of Australia (RBA) left rates unchanged at 4.35% during its September 24 meeting, in line with expectations. The RBA has signaled it will monitor inflation risks, but Governor Michele Bullock downplayed any imminent rate hike, noting a rate hike was not seriously considered.

Markets are currently pricing in a 55% chance of a 25 basis point rate cut by the end of the year. The RBA is expected to be among the last G10 central banks to cut interest rates, with cuts likely later this year due to weak economic activity expected to ease inflationary pressures.

While rate cuts from the Federal Reserve are already being factored into the market, AUD/USD could see further gains in 2024, although uncertainties surrounding China’s economy and its stimulus measures remain.

On the data front, Australia’s Ai Group Industry Index improved to -18.6 in September.

AUD/USD Daily Chart

AUD/USD Short-Term Technical Outlook

Next, AUD/USD could retest the 2024 high of 0.6942 (September 30) before challenging the critical 0.7000 level.

On the other hand, there is early contention around the September low of 0.6622 (September 11), which is supported by the significant 200-day SMA (0.6626), before hitting the 2024 low of 0 ,6347 (August 5).

The four-hour chart indicates the resumption of the uptrend. That said, the initial resistance is 0.6942, which precedes 0.7024. On the downside, the initial support level is 0.6856, followed by 0.6817. The RSI has dropped to around 48.