AUD/USD Forecast: Buyers willing to push it further up

AUD/USD Current Price: 0.6552

• The Reserve Bank of Australia Meeting Minutes left the door open for additional rate hikes.
• Speculation mounts the Federal Reserve will maintain rates higher for longer.
• AUD/USD advanced for a fifth consecutive day, faces critical resistance at 0.6610.

The AUD/USD pair peaked on Tuesday at 0.6578, the highest in three weeks early in the American session. The pair retreated afterwards towards the 0.6550 region, where it stands ahead of the Asian opening, posting gains for the fifth consecutive day.

The focus was on central banks at the beginning of the day, as the People’s Bank of China (PBoC) lowered the five-year Loan Prime Rate (LPR) by 25 basis points (bps) to 3.95%. The LPR is a crucial reference lending rate for mortgages and was trimmed by the most on record. Nevertheless, Chinese stocks edged lower as the rate cut fell short of boosting demand.

Also, the Reserve Bank of Australia (RBA) released the Minutes of its February monetary policy meeting. The document showed the Board considered either the case to hike by 25 bps or to hold steady, deciding on the latter. Policymakers also agreed it was not to rule out another rise in rates, despite adding that the latest data increased the Board’s confidence inflation will return to target in a reasonable time frame.

Meanwhile the US Dollar suffered from increasing speculation the Federal Reserve (Fed) will further delay a rate cut. Market players now believe the central bank has more chances to take action in the June meeting rather than in the May one. By the end of the day, speculative interest took some profits out of the table, providing near-term support to the USD that anyway seems poised to extend its slump-

AUD/USD short-term technical outlook

From a technical point of view, the daily chart for the AUD/USD pair supports additional gains, particularly if the pair holds above 0.6542, the 23.6% Fibonacci retracement of the 0.6871/0.6442 slump. In the mentioned time frame, technical indicators maintain bullish slopes, although within neutral levels, falling short of confirming an upcoming rally. At the same time, the pair stands above converging 20 and 100 Simple Moving Averages (SMAs) but met sellers after briefly surpassing a flat 200 SMA.

The 4-hour chart shows a mildly bearish 200 SMA capped the upside around the daily high, while AUD/USD trades above a bullish 20 SMA, which advanced above the 100 SMA. At the same time, technical indicators remain within positive levels, aiming to regain the upside after correcting overbought conditions. The bullish case should strengthen on a break above 0.6610, the 38.2% retracement of the aforementioned daily slump.

Support levels: 0.6545 0.6500 0.6465  

Resistance levels: 0.6580 0.6610 0.6650