Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6600.
- Add a stop-loss at 0.6783.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6727 and a take-profit at 0.6825.
- Add a stop-loss at 0.6650.
The AUD/USD exchange rate continued retreating as the market focused on the latest interest rate decision by the Reserve Bank of Australia (RBA). It also tumbled to the lowest level since November 30th after the latest Australian GDP data. It was trading at 0.6690, which was much lower than this month’s high of 0.6855.
RBA interest rate decision and Australia GDP
The AUD/USD price drifted lower after the RBA delivered its eighth interest rate hike on Tuesday. As was widely expected, the RBA decided to hike interest rates by 0.25% for the third straight time. It took the official cash rate to 3.1%, the highest level in more than a decade.
In its statement, the RBA warned that there will be more rate hikes in 2023. Most economists polled by Reuters expect the rates will peak at 3.7%. Governor Philip Lowe said that future rates will be guided by incoming data.
In a statement, analysts at Oxford Economics said that the bank will likely continue hiking rates to 3.85% in 2023. Economists at NAB expect that the bank’s rate hikes will peak at 3.6% while Commonwealth said that rates will peak at 3.35%.
On Wednesday, economic data showed that the Australian economy staged a strong recovery in the third quarter. It rebounded by 5.9% in Q3 after expanding by 3.6% in the previous quarter. On a QoQ basis, the economy expanded by 0.6% as consumer spending increased.
High-interest rates are having an impact on the housing market. Building approvals declined by 6.0% in October while private house approvals fell by 2.2%.
The AUD/USD price also plunged as the US dollar index made a strong comeback. The dollar index rose to above $105 as hopes of higher Fed interest rates followed the strong American economic data.
AUD/USD forecast
The AUD/USD price continued falling after the Australian GDP and RBA decision. It has formed a triple-top pattern, which is usually a bearish sign. The pair dropped below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) is nearing the oversold level.
It also dropped below the ascending trendline, invalidating the ascending triangle pattern. Therefore, the outlook for the pair is bearish, with the next level to watch being 0.6600.
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