Bullish View
Buy the AUD/USD pair and set a take-profit at 0.7550.
Add a stop-loss at 0.7400.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 0.7450 and a take-profit at 0.7350.
Add a stop-loss at 0.7550.
The AUD/USD rose to the highest level since July as investors and analysts cast doubt on the guidance offered by the Reserve Bank of Australia (RBA). The pair is trading at 0.7485, which is about 4.35% above the lowest level on September 29.
RBA Rate Hike Bets Rise
The RBA published the minutes of this month’s monetary policy meeting on Tuesday. In the minutes, the members sounded a bit optimistic about the economy as the government accelerates its vaccination rollouts.
At the same time, the bank pointed that it will hike interest rates when the employment situation in the country improves. It expects that this will happen in 2024. However, analysts believe that the bank will hike sooner.
For one, Australia’s inflation is expected to rise as supply challenges remain. The country is also facing substantial energy challenges as gas prices rise. At the same time, home prices have rocketed higher and the cost of other items has also risen substantially. As such, analysts surveyed by Financial Review found that most analysts expect that the RBA will move in 2023. Others believe that the bank will hike in 2022.
The AUD/USD is also rising even after the relatively disappointing economic data from China. Data published by the country’s statistics agency showed that the economic growth declined sharply in the third quarter.
Sadly, the situation will likely continue considering that the government is disrupting growth of the real estate sector. This is important for Australia because the country sells most of its commodities to China.
The AUD/USD also rose after the relatively weak US building permits and home starts data. The numbers showed that the country’s building permits declined by 7.7% in September while housing starts fell by 1.6% in the same period.
AUD/USD Forecast
The AUD/USD pair rose to a high of 0.7485, which was the highest level in months. The price managed to move above the previous September high of 0.7478. It has also moved above the 25-day and 50-day moving averages. It has also risen to the upper side of the Bollinger Bands while the Relative Strength Index (RSI) has been rising.
Therefore, the path of the least resistance for the pair is to the upside, with the next key resistance being at 0.7550. This view will be invalidated if the price drops below the key support at 0.7440.
