Bearish View
Sell the AUD/USD and set a take-profit at 0.7350.
Add a stop-loss at 0.7500.
Timeline: 1-2 days.
Bullish View
Set a buy-stop at 0.7463 and a take profit at 0.7550.
Add a stop-loss at 0.7350.
The AUD/USD declined to the lowest level since October 19th after the relatively hawkish interest rate decision by the Reserve Bank of Australia (RBA). The pair is trading at 0.7430, which is about 1.70% below the highest level in October.
RBA Decision
The AUD/USD declined as investors sold the RBA news since most analysts were expecting the bank to turn hawkish in this meeting. In a statement, the bank decided to do away with the yield curve program.
The bank also decided to continue with its quantitative easing program by acquiring $4 billion worth of government bonds per week. It expects to unwind the program in the coming months.
At the same time, the RBA hinted that it was open to hiking interest rates earlier than expected. In its previous meeting, the bank said that it will hike rates in 2024. But in this week’s decision, the bank said that it will likely hike rates in 2023. Still, analysts believe that the bank will start hiking rates earlier than that.
With the RBA done, focus now shifts to the upcoming Federal Reserve interest rate decision. The bank will conclude its meeting later today. Like the RBA, analysts expect the Fed will sound a bit hawkish since the US economy is seeing a strong rebound. Consumer prices have rallied to a multi-year high while the unemployment rate is falling.
In addition to the Fed decision, the next key catalyst for the AUD/USD pair will be the upcoming Australian retail sales numbers that will come out on Thursday. These are important numbers since consumer spending is the biggest constituent of the country’s economy. Australia will also publish its latest trade numbers on Thursday.
The next key thing to watch will be the ADP private payrolls data that will come out later today. The data will com two days ahead of the latest US non-farm payrolls data.
AUD/USD Forecast
The AUD/USD pair made a bearish breakout after the RBA decision. The pair moved below the important trendline shown in black. On the two-hour chart, it is also along the lower side of the Bollinger Bands while the MACD has been in a strong bearish trend. The pair has also moved below the 23.6% Fibonacci retracement level.
Therefore, the pair will likely keep falling as bears target the next key support level at 0.7350. On the flip side, a move above 0.7470 will invalidate the bearish view.
