Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6750.
- Add a stop-loss at 0.6625.
- 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 price continued rising as traders reflected on the next moves by the Reserve Bank of Australia (RBA) after the bank left rates unchanged. After dropping initially, the pair jumped to the highest level since June 27th. It has jumped by a few pips from last week’s low of 0.6595.
More RBA rate hikes ahead
The AUD/USD pair rose as investors priced in more rate hikes by the RBA. In its decision on Tuesday, the bank decided to leave rates unchanged at 4.10%. Economists were expecting the bank to continue hiking interest rates by another 0.25%.
The bank said that the pause was necessary since it will give it more time to assess the impact of the recent rate hikes. Still, analysts believe that the bank will deliver at least two more rate hikes later this year. In a note, an analyst at Jarden said:
“While the RBA proclaims to place a priority on returning inflation to target within a reasonable timeframe, this pause combined with recent data suggests their commitment to taming inflation is below global peers.”
The Australian economy is doing modestly well. Recent data showed that the unemployment rate remains at a lower level while the government’s surplus is rising. Higher personal income taxes because of the lower unemployment rate coupled with more mining revenue have driven this surplus.
The AUD/USD pair will next react to the upcoming Fed minutes and US jobs numbers. Minutes, which will come later today, will provide more details about the deliberations that happened in the last meeting.
Unlike the RBA, economists expect the Fed will deliver another 0.25% rate hike later this month since inflation remained above its 2.0% target.
AUD/USD technical analysis
The AUD/USD pair continued rising during the Australian session. It has entered the Ichimoku cloud and moved above the 50-period moving average. The pair has risen above the Woodie pivot point while the two lines of the MACD have moved above the neutral point. At the same time, the Relative Strength Index (RSI) has moved above the neutral point.
Therefore, the pair has some more upside as buyers target the next psychological level at 0.6745, the upper side of Ichimoku cloud. A move below the pivot point at 0.6650 will invalidate the bullish view.
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