Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6725.
- Add a stop-loss at 0.6635.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6650 and a take-profit at 0.6600.
- Add a stop-loss at 0.6750.
The AUD/USD pair rebounded to its highest point since June 12th as market participants predicted that the Reserve Bank of Australia (RBA) could decide to hike interest rates later this year. It rose to 0.6700, up from this month’s low of 0.6580.
RBA rate hike
The AUD/USD exchange rate has staged a strong comeback after the Reserve Bank of Australia delivered its monetary policy meeting. In it, it left interest rates unchanged at a 12-year high of 4.3% and sounded a bit hawkish.
The committee discussed delivering a rate hike because of the stubbornly high inflation rate. It vowed to continue being data-dependent when making the next rate decisions.
Therefore, the next quarterly inflation report scheduled for mid-July will determine the next actions. If the inflation figure comes out hotter than expected, it will raise the possibility of the bank hiking interest rates in the next meeting.
A rate hike by the RBA would be the opposite of what the Fed is planning to do. In its interest rate decision, the bank decided to leave rates unchanged. The committee also predicted that it will deliver one rate cut this year.
Most economists believe that the next move by the Fed will be lower. What is unclear is when the bank will make the first move. Most analysts expect the bank to cut rates in its December meeting while others see it slashing in the first quarter of 2025.
The next important data that will likely move the AUD/USD pair will be the US housing data scheduled for Thursday. These numbers will likely show that the housing starts and building permits rose slightly in May.
The Philadelphia Fed will publish the manufacturing index data while the BLS will release the country’s initial and continuing jobless claims numbers.
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AUD/USD technical analysis
The AUD/USD exchange rate has staged a strong rebound this week after the hawkish RBA decision. It has jumped above the Ichimoku cloud and the 50-period moving average while the MACD and the Relative Strength Index (RSI) have moved upwards.
The momentum oscillator has also jumped to the highest point since June 16th. Therefore, the pair will likely continue rising as buyers target the key resistance level at 0.6700. A break above that level will point to more upside
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