Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7250.
Add a stop-loss at 0.6980.
Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6980.
Add a stop-loss at 0.7250.
The AUD/USD pair wavered on Tuesday morning after the Reserve Bank of Australia (RBA) delivered its interest rate decision. It jumped to 0.7075 as focus shifted to the upcoming Federal Reserve decision on Wednesday. It has jumped by 1.45% from its lowest point this month.
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FOMC and RBA Interest Rate Decision
The AUD/USD pair rose after the RBA delivered its interest rate decision, which was in line with expectations. In a statement, the bank decided to leave rates unchanged at 4.35%. It was the first time that the bank has left rates intact this year as officials worked to reduce inflation.
The bank’s decision came after key data showed that the country’s inflation softened and the labor market worsened. A report showed that the headline Consumer Price Index (CPI) eased from 4.6% in March to 4.2% in April. The underlying core inflation remained at 3.4%, higher than the RBA’s target band of between 2% and 3%.
Another report showed that the labor market worsened in April, with the economy losing 10.7k jobs after adding 63.4k in the previous month. The seasonally adjusted unemployment rate jumped to 4.5% during the month. As such, the RBA is taking time to assess the impact of its interest rate hikes on the economy.
The AUD/USD pair will next react to the upcoming FOMC interest rate decision on Wednesday this week. Economists and Polymarket traders believe that the bank will leave rates unchanged in this meeting. The rate pause will give officials, including Kevin Warsh, a chance to observe more data.
Recent data showed that the headline consumer and producer inflation continued rising in May. On the positive side, there are signs that inflation will start falling in the near term as crude oil prices have retreated after the US deal.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has crawled back in the past few days. It rose from a low of 0.6980 on June 11 to the current 0.7075.
The pair has remained above the ascending trendline, which connects the lowest swings in January, March, and June. Also, the Relative Strength Index (RSI) has jumped from 33 to 45 today.
Still, the pair is yet to move above the 25-day and 50-day moving averages. As such, bulls will need to flip these averages to confirm more upside. If this happens, the next level to watch will be at 0.7250.
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