AUD/USD Forecast: Dollar demand overshadows RBA

AUD/USD Current Price: 0.7497

• The RBA was more hawkish than anticipated, given the aussie a boost.
• Australian TD Securities Inflation improved from -0.2% to 0.4% in June.
• AUD/USD is at risk of falling further and challenge the 0.7400 threshold.

The AUD/USD pair surged to 0.7598 during Asian trading hours, as the aussie got boosted by the Reserve Bank of Australia but shed over 100 pips to settle just below 0.7500. As widely anticipated, the central bank left its monetary policy unchanged, with the cash rate steady at 0.1%. Also, it will keep the yield curve target at April 2024 bond and not extend to the November 2024 line, while starting September, the RBA will buy $4 billion worth of government bonds per week, down from the current $5 billion.

However, Governor Phillip Lowe was quite hawkish, as he said that “the condition for an increase in the cash rate depends upon the data, not the date,” adding that policymakers expect inflation to just reach 2% by mid-2013, although sticking to the 2024 forecast for the first hike.

On the data front, the country published June TD Securities Inflation which improved from -0.2% to 0.4%. On Wednesday, Australia will publish the June AIG Performance of Services Index, previously at 61.2.

AUD/USD short-term technical outlook

The AUD/USD pair seems poised to extend its slide in the near-term. The 4-hour chart shows that it has fallen below all of its moving averages, while the Momentum indicator heads firmly lower and is about to cross its midline into negative territory. The RSI indicator currently hovers around 44 without clear directional strength. The pair will likely accelerate its decline on a break below 0.7480, the daily low.

Support levels:  0.7480 0.7440 0.7400

Resistance levels: 0.7570 0.7610 0.7650

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