The US economy saw a significant slowdown in growth during Q1 2024, with an expansion rate of only 1.3% compared to 3.4% in the previous quarter. In addition, initial jobless claims are expected to rise slightly from 215k to 218k by the end of May. These numbers indicate a potential shift in economic momentum, which could have ripple effects on global markets.
Tight labor market conditions have been supporting wage growth in the US, leading to an increase in disposable income. This upward trend in disposable income could boost consumer spending and drive demand-led inflation. However, if the Federal Reserve maintains a higher interest rate path for an extended period, it may result in higher borrowing costs and subsequently dampen consumer spending.
Key figures from the Fed, such as Vice Chair John Williams and FOMC member Lorie Logan, are scheduled to make statements regarding inflation, the US economy, and interest rate projections. These comments could influence investor sentiment and impact near-term trends in the AUD/USD exchange rate. Positive US economic data coupled with indications of a tighter monetary policy stance could lead to a strengthening of the US dollar against the Australian dollar.
The AUD/USD pair has been trading above both the 50-day and 200-day Exponential Moving Averages (EMAs), signaling a bullish trend. A breakout above the $0.66500 level could pave the way for a move towards the $0.67003 resistance level, followed by a potential rally towards $0.67500. On the other hand, a decline below the $0.66000 handle and the 50-day EMA could indicate a retreat towards the 200-day EMA and the $0.65760 support level.
Investors in the AUD/USD pair should closely monitor upcoming releases such as Aussie housing sector data, Reserve Bank of Australia (RBA) announcements, and US economic indicators. With the 14-period Daily Relative Strength Index (RSI) currently at 50.66, there is scope for further upside potential in the AUD/USD pair before reaching overbought levels. Traders should remain vigilant for any shifts in market sentiment and adjust their positions accordingly.