Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6800.
- Add a stop-loss at 0.6600.
- Timeline:1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6600.
- Add a stop-loss at 0.6800
The AUD/USD pair continued its recent rally, reaching its highest levels since October 2024 after the Reserve Bank of Australia (RBA) published minutes of the last monetary policy meeting. It rose to a high of 0.6700, much higher than the November low of 0.6420.
RBA Discussed Scenarios for Rate Hikes
The AUD/USD exchange rate held steady as the RBA minutes pointed to potential divergence between the Federal Reserve and the Reserve Bank of Australia (RBA).
Minutes released on Tuesday showed that Reserve Bank of Australia officials deliberated scenarios for interest rate hikes in the last monetary policy meeting of the year.
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Odds that the RBA will hike interest rates rose sharply after the country published that recently inflation report, which showed that consumer prices jumped last month. Another report released this week showed that inflation expectations continued rising this month.
An RBA rate hike will happen as some Federal Reserve officials continue considering interest rate cuts even after the Bureau of Labor Statistics (BLS) published strong macro numbers on Tuesday. Its report showed that the economy expanded at the fastest pace in years during the third quarter despite the ongoing tariff risks.
The American economy has been boosted by robust consumer spending, which is partly driven by the strong performance of Buy Now, Pay Later (BNPL) companies.
Additionally, the ongoing AI spending has helped to boost the economy, with companies like Amazon, Google, and Meta Platforms spending billions of dollars in data centers.
However, more data showed that the economy had some substantial risks, including the ongoing consumer confidence drop. Confidence has tumbled because of the rising unemployment rate and inflation fears in the country.
AUD/USD Technical Analysis
The daily timeframe chart shows that the AUD/USD exchange rate has held steady in the past few weeks, and on Tuesday, it moved to the highest level since October 2024. It moved above the important resistance level at 0.6685, its highest level in September and the previous YTD high.
The Relative Strength Index (RSI) and the MACD indicators have continued rising, a sign of growing momentum. Therefore, the pair will likely continue rising, with the next key target being the psychological level at 0.6800. A drop below the key support level at 0.6617 will invalidate the bullish outlook.
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