AUD/USD Forecast: Aussie retakes 0.6700, but signs are mixed
AUD/USD Current Price: 0.6728
- RBA minutes showed the Board discussed a 25 basis points rate hike.
- US Dollar Index pulled back after two-day rally.
- AUD/USD looks set to remain near the 0.6700 area.
The AUD/USD rose modestly on Tuesday in a quiet session amid a retreat of the US Dollar. The pair climbed back above 0.6700 on Asian hours after Reserve Bank of Australia (RBA) minutes and following Chinese economic data, peaking at 0.6743 and pulling back later toward 0.6700. The US Dollar pulled back after rising considerably for two days in a row.
In April, the RBA left rates unchanged after ten consecutive increases. The meeting minutes showed no major surprises and pointed to the Board’s preference to stay on hold to assess the impact of the accumulative hikes and uncertainties around the economic outlook. The minutes showed there was a debate on whether to hike by 25 basis points amid persistently high inflation and inflation risks. Also, they wanted to make it clear that policy may need to be tightened further in the future.
The message was seen tilted to the hawkish side and boosted the Aussie marginally. Market participants continue to see the RBA keeping interest rates unchanged at the May meeting. On Wednesday, the Melbourne Institute will release the Westpac–Melbourne Institute Leading Index of Economic Activity.
Some risk appetite partially helped the AUD/USD during Tuesday’s Asian session after data showed the Chinese economy grew 4.5% during the first quarter and Retail Sales soared 10.6% in March; both figures came in above expectations, boosting commodity prices modestly.
AUD/USD short-term technical outlook
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On the daily chart, the AUD/USD is holding above the 20-period Simple Moving Average (SMA) but unable to rise above the 200-period SMA at 0.6740. As a result, the pair is moving sideways and will likely keep doing so as long as it remains below 0.6800. A key support emerges at 0.6620 before the psychological 0.6600.
On the 4-hour chart, AUD/USD hovers around the 20-period SMA, offering mixed signs, suggesting some consolidation ahead. The mentioned moving average and Momentum are turning south, while the Relative Strength Index (RSI) is flattening around 50. Price is below the 20-period SMA but above the 55, 100 and 200 lines. Above 0.6740, more gains seem likely, targeting 0.6765, the last defense to a test of 0.6795. On the flip side, under 0.6715, the AUD/USD could extend the decline to 0.6680.
Support levels: 0.6680 0.6630 0.6600
Resistance levels: 0.6740 0.6765 0.6795
View Live Chart for the AUD/USD
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Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
