Bullish View
Buy the AUD/USD and set a take-profit at 0.7170.
Add a stop-loss at 0.7000.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 0.7020 and a take-profit at 0.6950.
Add a stop-loss at 0.7100.
The AUD/USD price tilted higher on Tuesday morning as the market reflected on the latest interest rate decision by the Reserve Bank of Australia (RBA). The pair rose to a high of 0.7058, which was slightly above last week’s low at 0.7000.
RBA Interest Rate Decision
The RBA concluded its two-day meeting on Tuesday. As was widely expected, the bank decided to leave its interest rate unchanged at 0.10%, where it has been since the pandemic started. The bank also committed to its quantitative easing. It will continue buying government bonds worth about $4 billion a week until February next year. The bank will hold about $350 billion of bonds issued by the government by February.
The main change in the statement was on when the bank will hike interest rates. In the previous meetings, the bank has insisted that it expected to hike interest rates the earliest in 2024. Most analysts believed that this view was unrealistic since the country’s economy is recovering at a faster pace. Other central banks like the Federal Reserve and Bank of England (BOE) are expected to move in the coming year.
Therefore, in the statement, the bank removed the 2024 target for rate hikes. It replaced it with a statement saying that the board was prepared to be patient.
In addition to the RBA decision, the AUD/USD also rose after the relatively strog Australian house price index data. According to the statistics agency, the house price index rose by about 5% in the third quarter. This was slightly below the increase in the second quarter.
China also published strong trade numbers. According to the statistics agency, the country’s imports increased by 31.7% in November. Exports rose by 22%, which was also better than the expected 19%.
AUD/USD Forecast
The four-hour chart shows that the AUD/USD pair has risen by a few pips in the past few days. It is trading at 0.7065, which is slightly above the 25-day moving average. The Relative Strength Index (RSI) has moved from the oversold level of 30 to the current 47. It has also moved above the pivot point.
Therefore, there is a likelihood that the pair will keep rising as bulls target the key resistance at 0.7170, which was the lowest level in September. The altermative scenario is where the pair drops below last week’s low at 0.700.
