AUD/USD Current Price: 0.6715
- RBA Assistant Governor says Australian banks are unquestionably strong.
- Risk sentiment improves after the weekend's developments, supporting the Aussie.
- AUD/USD moving with a bullish bias, above 0.6700 and limited while below 0.6730.
The AUD/USD climbed back above 0.6700 and rose for the third consecutive day on Monday, supported by an improvement in market sentiment following a busy weekend. The banking crisis remains in the spotlight ahead of the Federal Reserve decision. China's central bank kept its 1 and 5-year loan rates unchanged at 3.65% and 4.30%, respectively.
On Monday, Christopher Kent, Reserve Bank of Australia's Assistant Governor (Financial Markets) mentioned that Australian banks are unquestionably strong. He argued that the full impact of increases in interest rates was taking longer to filter through to the economy. The RBA could pause in April; however, some analysts warn it is too soon for a pause and foresee a 25 basis point rate hike. On Tuesday, the RBA will release the minutes of the March 7 policy meeting, when the Board decided to increase the key rate by 25 basis points to 3.60%.
The US Dollar Index retreated below 103.40 to the lowest level in a month as US and European stock markets rose. On Tuesday, the FOMC will begin its two-day meeting. Most analysts still see a 25 basis point rate hike, but they warn the central bank is in a difficult position and that any outcome is possible. The weaker USD is a crucial support for the AUD/USD. If the market's mood improves further, more gains seem likely, mainly if the Fed is seen near the end of its tightening cycle.
AUD/USD short-term technical outlook
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The pair rose above the 20-day Simple Moving Average (SMA) on the daily chart, currently at 0.6698, for the first time since early February; in addition, it is consolidating above the 0.6700 mark. Both are positive developments for Aussie's bulls. While AUD/USD remains above 0.6700, more gains are on the cards. The next critical area to the upside is seen around the 100- and 200-day SMAs at the 0.6770 zone.
The AUD/USD is moving with a bullish bias ahead of the Asian session, with positive momentum and testing weekly highs and the 0.6720 area. Technical indicators on the 4-hour chart are pointing to the upside, with RSI still far from 70. A slide below 0.6680 would ease Aussie's momentum. A break under 0.6630 would expose an uptrend line at 0.6610.
Support levels: 0.6670 0.6635 0.6600
Resistance levels: 0.6750 0.6775 0.6795
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