Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6625.
- Add a stop-loss at 0.6520.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6545 and a take-profit at 0.6450.
- Add a stop-loss at 0.6645.
The AUD/USD pair was flat on Wednesday morning as traders reflected on the latest Federal Reserve and Reserve Bank of Australia (RBA) minutes. The pair retreated to a low of 0.6550, lower than this week’s high of 0.6588
Fed and RBA minutes
The RBA published minutes of the last monetary policy meeting on Tuesday. In the minutes, the bank justified its decision to hike rates by 0.25% in its November meeting. The officials pointed to the elevated inflation in the country.
They also noted that the rate hike was necessary to avoid a bigger rate hike in the coming meetings. Therefore, economists expect the bank to leave rates intact in its December meeting. The next rate hike will likely come in February after the statistics agency publishes its inflation data.
Recent economic numbers have shown that Australia is not doing badly. For one, consumer spending has improved, as house prices bounced back. Higher house prices boost households' sense of wealth.
Also, last week’s data from China showed that the economy was doing well as retail sales and industrial production recovered. Chinese economic numbers are important because of the volume of goods the country buys from Australia.
The AUD/USD also retreated after the Fed published its minutes. These minutes revealed that all committee members were cautious in this month’s meeting. The members supported proceeding carefully on future rate moves.
In that meeting, the Fed decided to leave interest rates unchanged between 5.25% and 5.50%. Most economists expect the bank will leave rates intact again in its December meeting since inflation is showing signs of cooling.
The key AUD/USD news to watch will be the upcoming US durable goods orders and a statement by Michele Bullock, the head of the RBA.
AUD/USD technical analysis
The AUD/USD exchange rate rallied to the highest point since August 10th after the RBA and Fed minutes. It then pulled back slightly to 0.6555. On the 4H chart, the pair is between the first and second resistance lines of the Andrews Pitchfork tool. It is also a few pips above the key support point at 0.6522, the highest swing on November 6th.
The pair is being supported by the 25-period and 50-period moving averages. Therefore, the path of the least resistance for the pair is bullish, with the next reference point to watch being 0.6625.
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