AUD/USD Forecast: Still bullish after RBA, helped by weaker Dollar

Matías Salord FXStreet

AUD/USD Current Price: 0.6695

The Reserve Bank of Australia (RBA) kept rates unchanged and maintained a hawkish tone.
The AUD/USD bottomed out after the RBA meeting, then recovered amid a weaker US dollar.
The pair holds a bullish bias but is showing not much conviction.

The AUD/USD rose on Tuesday's session following the Reserve Bank of Australia's (RBA) meeting. The pair tested levels above 0.6700 supported by a weaker US dollar across the board, but failed to hold above.

The RBA decided to keep its interest rate on hold at 4.10%. However, as expected, the bank maintained a hawkish tone, leaving the door open to further rate hikes. It paused to assess the impact of the rate hikes delivered so far and removed from the statement the reference that inflation risks are tilted to the upside. The decision was widely expected, as many analysts had forecasted a rate hike. Market participants still see more rate hikes from the RBA in the future.

The Aussie immediately pulled back after the decision, with AUD/USD falling below 0.6650, but then it rebounded, recovering its position, mainly due to a weaker US Dollar. AUD/NZD posted the lowest close in a month, around 1.0800.

The meeting weighed on the Aussie and its outlook. Incoming economic data from Australia, particularly inflation, will be critical for the Aussie. The Ai Group Australian Industry Index is due on Wednesday, along with the final reading of the Judo Bank Australia Services PMI, which is expected to remain at 50.7.

Regarding the US Dollar, it lost momentum on a quiet Tuesday, favoring the rebound in AUD/USD. On Wednesday, the Federal Reserve will release the minutes of its latest meeting. Afterwards, on Thursday, the ADP Nonfarm Employment report is due, and on Friday, the Nonfarm Payrolls report will be released.

AUD/USD short-term technical outlook

The AUD/USD has risen for four consecutive days and has closed above the 20-day Simple Moving Average (SMA). However, technical indicators do not show much conviction at the moment. If the pair manages to consolidate above 0.6700, the Aussie should strengthen further.

On the 4-hour chart, the AUD/USD is moving with a bullish bias, but it is losing momentum. A bearish correction could extend to 0.6665 without changing the current outlook. A key support awaits at 0.6650, a horizontal level and downtrend line. A drop below this level would open the doors to further weakness.

The next crucial support stands at 0.6600, and a daily close below it would leave the Aussie vulnerable to more losses. If the pair consolidates above 0.6700, then a test of 0.6720 seems likely. A break above this level is needed to confirm more strength ahead, and attention would turn to 0.6755.

Support levels: 0.6665 0.6635 0.6615

Resistance levels: 0.6720 0.6755 0.6785

View Live Chart for the AUD/USD

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.

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