Fundamental analysis AUDUSD for 04.04.2024

The Australian Dollar (AUD) has been on a three-day winning streak, bolstered by optimistic data releases.

Australia's Judo Bank Services PMI improved to 54.4 in March from 53.5 in February. Judo Bank Composite PMI rose from 52.4 to 53.3.

Australia’s Building Permits (MoM) fell by 1.9% in February against the expected increase of 3.3% and the previous decline of 2.5%. In comparison, there is an increase of 5.2% YoY, compared to the previous increase of 4.8%.

The Australian industrial group (AiG) improved in February, rising to  -5.3 from -14.9 previously.

The AiG Manufacturing PMI was -7 compared to the previous reading of -12.6. The AiG Construction PMI showed -12.9 for February, compared to the previous reading of -18.4.

The positive momentum was also influenced by an uptick in Chinese Services PMI,China's Services PMI improved to 52.7 in March, compared with the previous reading of 52.5.

However, despite the encouraging economic indicators, the Reserve Bank of Australia (RBA) maintained a cautious stance during its March meeting. The board expressed uncertainty regarding future changes in the cash rate, citing the need for more time to regain confidence in inflation reaching target levels. Westpac's summary echoed this sentiment, emphasizing the current suitability of the cash rate while acknowledging the potential for future adjustments.

Conversely, in the US, dovish remarks from Federal Reserve officials, including Fed Chair Jerome Powell and various FOMC members, hinted at potential rate cuts in response to ongoing disinflationary pressures. This sentiment was supported by economic data.

US ADP job change rose by 184,000 in March, up 155,000 from February and above  market expectations of 148,000.

The US ISM services PMI fell to 51.4 in March from 52.6 in February, weaker than the forecast of 52.7.

The US ISM manufacturing PMI  surprise improved in March, with the index rising to 50.3 in March from 47.8 in February, beating expectations of 48.4. This figure is the highest  since September 2022.

Looking ahead, attention turns to upcoming data releases and commentary, especially Australian retail sales numbers, which could impact consumer confidence and spending. Likewise, the US labor market remains a focal point, with the weekly unemployment claims report and FOMC members' speeches expected to influence market sentiment and expectations regarding future monetary policy decisions.

Technical analysis and scenarios:

The Alligator indicator indicates a strong uptrend: the mouth is wide open and the jaw (blue line) is located below the lips and teeth (green and red lines). The Awesome Oscillator (AO) and Accelerator Oscillator (AC) are in the green zone, confirming a buy signal.

Main scenario (BUY)

Recommended entry level: 0.65900

Take profit: 0.66200

Stop loss: 0.65675

Alternative scenario (SELL)

Recommended entry level: 0.65675

Take profit: 0.65450

Stop loss: 0.65900