AUD/USD Current Price: 0.6554
- RBA minutes and Governor Bullock express concerns about inflation.
- The US Dollar Index rebounds from monthly lows but continues to indicate a downward trend.
- The AUD/USD retreats after testing the 200-day SMA.
The AUD/USD reached fresh three-month highs near 0.6600 and turned to the downside as the US Dollar strengthened, recovering from monthly lows. The FOMC meeting minutes showed no surprises, and attention now shifts to US data.
The Reserve Bank of Australia (RBA) released its minutes from the November 7 meeting, during which it raised interest rates by 25 basis points to 4.35%. "Members assessed that tightening monetary policy at this meeting would help to mitigate the risk of an unwelcome rise in inflation expectations," the documents stated. Members expected inflation to take longer to return to target "than it had taken so far to reduce inflation from its peak."
Prior to the minutes, RBA Governor Michele Bullock also sounded hawkish. She explained that inflation remains a crucial challenge for the next one to two years and added that inflation is driven not only by supply factors such as petrol prices, rents, and energy but also by an underlying demand component. However, the Australian Dollar did not benefit from the tone of the minutes and Bullock's remarks, as seen by the decline in AUD/NZD to 1.0810. Bullock is scheduled to speak again on Wednesday, addressing the economy and monetary policy. However, after Tuesday's speech, no surprises are expected. The Melbourne Institute will release its Leading Index.
The US Dollar consolidated its gains following the release of the FOMC minutes, which showed no surprises. On Wednesday, data from the US includes weekly Jobless Claims and Durable Goods Orders.
AUD/USD short-term technical outlook
The AUD/USD dropped back to the 0.6550 area after encountering resistance at the 200-day Simple Moving Average (SMA). The trendline and the 0.6600 area are crucial resistance levels that the pair needs to break to signal further gains. The chart still indicates an upside bias, with the price above other important SMAs.
On the 4-hour chart, bearish correction could potentially continue during the Asian session, as suggested by technical indicators. The Relative Strength Index (RSI) is moving lower from overbought levels, and the Moving Average Convergence Divergence (MACD) shows bearish signals. If the decline continues below 0.6540, it could extend to 0.6520 and then 0.6490.
Support levels: 0.6540 0.6520 0.6485
Resistance levels: 0.6565 0.6590 0.6625
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