• Markets are waiting for data from the US this week.

• Home prices in Australia increased last year, recovering significantly from the 5% drop in 2022.

• The RBA lifted rates in November last year by a quarter point to 4.35%.

The AUD/USD outlook took a bearish turn on Tuesday as the dollar surged on the first day of the year. Traders focused on economic data, anticipating crucial insights into the Fed’s policy outlook. Data from the US this week will include job vacancies and employment change.

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Additionally, traders will go over minutes from the Fed meeting in December, coming out on Thursday.

Meanwhile, home prices in Australia increased last year, recovering significantly from the 5% drop in 2022. However, RBA rate hikes and the high cost of living in the country have negatively impacted growth in the last part of 2023.

Property consultant CoreLogic released figures on Tuesday showing prices rose by 8.1% in 2023. However, this increase was far below the 24.5% rise reported in 2021. Meanwhile, prices in December recorded the smallest increase since February, coming in at 0.4%.

Notably, the RBA lifted rates in November last year by a quarter point to 4.35%. This hike came due to worries inflation expectations might increase. Consequently, interest rates in the country have risen by a significant 425 basis points starting May last year.

Australian households are suffering as high inflation increases financial pressures. Notably, inflation hit a high of 7.8% last December and then fell to 5.4% in the third quarter. Still, the RBA believes that most borrowers in the country can service their mortgages.

AUD/USD key events today

No high-impact releases are coming from the US or Australia today. Therefore, the pair will likely pause ahead of data coming out tomorrow.

AUD/USD technical outlook: Bears puncture SMA after bearish RSI divergence

On the technical side, AUD/USD bears have strengthened enough to puncture the 30-SMA support. This move comes after the RSI made a bearish divergence with the price as bullish momentum weakened. Notably, the bullish trend started weakening at the 0.6725 key level as the slope of the trend became shallow.

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Finally, the trend stopped at the 0.6850 key level. Although bulls tried to push above this resistance, bears soon took over, sending the price below the SMA. At the same time, the RSI punctured the pivotal 50 mark. Still, the price is retesting 0.6850 before likely dropping further.

https://www.forexcrunch.com/blog/2024/01/02/aud-usd-outlook-dollar-strengthens-ahead-of-key-data/