The Reserve Bank of Australia (RBA) concluded its two-day meeting and did what most economists were expecting.
- Set a buy-stop at 0.6760 and a take-profit at 0.6875.
- Add a stop-loss at 0.6675.
The AUD/USD price plunged to the lowest level since November 30th as investors reacted to the latest interest rate decision by the Reserve Bank of Australia (RBA). It crashed to a low of 0.6690, which was lower than this week’s high of 0.6851.
RBA interest rate decision
The Reserve Bank of Australia (RBA) concluded its two-day meeting and did what most economists were expecting. It decided to hike interest rates by 0.25% for the third straight meeting. This increase brought the official cash rate to 3.1%, the highest level in a decade.
The RBA has been under pressure to reign in inflation, which has surged to the highest level in three decades. Most notably, the RBA has been accused of misleading 95,000 people in 2021 by hinting that rates will increase in 2024.
Recent data provides more relief for the RBA as inflation has started retreating. The headline consumer price index (CPI) declined from 7.3% in September to 6.9% in October. This trend will likely continue considering that crude oil and natural gas prices have been in a downward trend lately.
In its statement, the RBA hinted that more rate hikes will still be needed in 2023. However, analysts expect that the bank will deliver several small rate hikes in 2023.
The next key catalyst for the AUD/USD price will be the upcoming Australia GDP data scheduled for Wednesday. Economists expect the data to show that the economy expanded by 0.7% in the third quarter leading to a year-on-year increase of 6.3%.
The Australian dollar also declined as the US dollar staged a major comeback. This decline happened after a series of strong economic data from the US. Economic data showed that the economy added over 283k jobs in November while the unemployment rate remained at 3.7%.
The 4H chart shows that the AUD/USD price continued dropping after the RBA decision. It moved below the ascending trendline shown in green. The pair also moved below the standard pivot point and the 50-day moving averages while the Relative Strength Index (RSI) moved below the neutral point.
Therefore, the pair will likely continue falling as sellers target the key support at 0.6600. A move above the resistance at 0.6760 will invalidate the bearish view.
Ready to trade our free daily Forex trading signals? We’ve shortlisted the best Forex brokers in the industry for you.