Bullish View
- Set a buy-stop at 0.7520 and a take-profit at 0.7645.
- Add a stop-loss at 0.7450.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 0.7440 and a take-profit at 0.7350.
- Add a stop-loss at 0.7600.
The AUD/USD pair retreat continued on Thursday morning as analysts increased their bets that the Reserve Bank of Australia (RBA) will take off in June. The pair also declined after the extremely hawkish minutes by the Federal Reserve. It is trading at 0.7477, which is lower than this week’s high of 0.7660.
June Rate Hike in Australia
The RBA concluded its monthly meeting on Tuesday. While the bank left rates unchanged at 0.1%, it hinted that it was losing patience on inflation. Therefore, after reading the report, many analysts are optimistic that the bank will deliver its first interest rate hike in June.
According to the Australian Financial Review, 7 of the economists it interviewed said that they expect a June hike. They included analysts from leading institutions like ANZ, Goldman Sachs, Macquarie, JP Morgan, and Jarden. Other economists who expect that the RBA will move in June are from UBS and Commonwealth Bank.
In a statement to the senate, the RBA deputy governor said that the bank was surprised about inflation had risen so rapidly during the pandemic. In 2021, the RBA was signaling that the bank will deliver its first interest rate hike in 2023 or 2024. She blamed inflation on the ongoing supply chain challenges.
The AUD/USD pair also declined after the latest minutes by the Federal Reserve. The minutes showed that the bank’s officials were expecting inflation will remain sticky in the near future as the crisis in Ukraine continued. Most members also sounded more optimistic about more rate hikes later this year. Some members also supported quantitative tightening.
Earlier today, data by Australia Statistics Bureau said that the country’s exports rose by 0% in February. Imports also rebounded by 12% while the trade surplus narrowed to A$7.1 billion. The rising commodity prices will lead to higher exports.
AUD/USD forecast
The AUD/USD retreated as the US dollar rose after the hawkish FOMC minutes. The pair is slightly below the highest point this month. It has moved slightly below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has continued moving downwards. It is approaching the oversold level of 30. The pair also moved slightly below the key support at 0.7537, which was the highest point on March 25 and 30.
Therefore, while the overall outlook is bearish, there is a likelihood that the pair will bounce back as investors buy the dip. If this happens, the next key level to watch will be this week’s high of 0.7650.
