Australian Dollar loses ground on lower S&P/ASX 200 on Monday.

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• Australian Dollar loses ground on lower S&P/ASX 200 on Monday.
• Australian currency is expected to remain subdued ahead of the Monthly Consumer Price Index and Retail Sales.
• US Dollar could face a struggle as US Treasury yields continue to lose ground.
• Fed is expected to prolong elevated interest rates after robust economic data from the United States.

The Australian Dollar (AUD) halts its winning streak initiated on February 14. This decline is influenced by Monday’s downward movement of the S&P/ASX 200. However, the Australian money market opened higher mirroring the optimism that propelled Wall Street to a record high on Friday. These market movements coincide with Nvidia’s exceptional earnings, which spurred a surge driven by robust demand for artificial intelligence-related products.

Australian Dollar is anticipated to remain subdued as investors await key economic releases, including the Australian Monthly Consumer Price Index on Wednesday and Retail Sales data on Thursday, for potential market-moving catalysts. However, recent data suggesting a resurgence in private sector activity in February, particularly driven by robust growth in the services sector, has provided some upward support for the AUD.

The US Dollar Index (DXY) maintains stability following recent gains over the past two sessions. Support for the US Dollar (USD) stemmed from robust employment and mixed Purchasing Managers Index (PMI) data from the United States (US), strengthening the argument for the Federal Reserve (Fed) to prolong elevated interest rates in order to tackle inflationary pressures. Market participants are anticipated to closely monitor key economic indicators such as Gross Domestic Product Annualized (Q4), Core Personal Consumption Expenditures, and ISM Manufacturing PMI later in the week, alongside the release of the Fed Monetary Policy Report.

The Australian Dollar trades near the key level of 0.6550 on Monday. An immediate resistance zone is anticipated around the previous week’s high at 0.6595, aligned with the psychological barrier at 0.6600. Additionally, further resistance is expected at the 38.2% Fibonacci retracement level of 0.6606, coinciding with February’s high of 0.6610. A breach above this level could propel the AUD/USD pair towards a significant level of 0.6650. Conversely, if the pair experiences downward pressure, a break below the major level of 0.6550 might lead the AUD/USD pair to a retest of the nine-day Exponential Moving Average (EMA) at 0.6544, followed by psychological support at 0.6500.

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