AUDUSD Forecast: Eyes turn to Australian wages and war developments

AUDUSD Current Price: 0.6735

• The RBA Minutes showed the Board is not on a pre-set path.
• A shift in the market sentiment sent investors into the US Dollar safety.
• AUDUSD gains near-term bearish traction amid a souring market mood.

The AUDUSD pair trades at around 0.6736, holding on to gains ahead of Wall Street’s close. The pair peaked at 0.6797, helped by the Reserve Bank of Australia (RBA) and US inflation-related figures.

The RBA released the Minutes of their November meeting, which showed that the Board has not a pre-set path on rate hikes and that a 50bps cannot be ruled out. A pause on hikes is also on the table should inflation in the country eases, although members upwardly revised their CPI forecasts, expecting the Consumer Price Index to reach 8% by the end of 2022, while underlying inflation is now foreseen at 6.5% from the previous estimate of 6%.

In the US, the focus was also on inflation as the Producer Price Index was up by 8% YoY in October, easing from 8.4% in September. Signs of easing price pressures hint at a Federal Revere (Fed) pivot, weighing on the US Dollar.

AUDUSD shed ground ahead of the US close, following news that Russian missiles landed at the Poland border with Ukraine. The fear that tensions between NATO and Moscow could escalate quite quickly put speculative interest on guard. Stocks fell, and the US Dollar recovered.

Data-wise, Australia will publish the October Westpac Leading Index and the Q3 Wage Price Index early on Wednesday.

AUDUSD short-term technical outlook

The daily chart for the AUDUSD pair shows that it bottomed for the day around its 100 SMA, while the 20 SMA advances below it. The Momentum indicator continues easing from near overbought readings while the RSI remains near overbought readings with a modest upward slope as the Australian Dollar is not reacting to risk-off news. It could, however, in the upcoming hours, should things worsen.

Technical readings in the 4-hour chart suggest that the pair could continue easing. Technical indicators turned lower, with the Momentum approaching its 100 line and the RSI finally leaving overbought territory. At the same time, the 20 SMA keeps heading higher below the current level, providing dynamic support at around 0.6680. The upcoming direction will depend on sentiment and how Asian stock markets react to the latest developments and Australian employment-related figures.

Support levels: 0.6710 0.6675 0.6630

Resistance levels: 0.6770 0.6805 0.8650

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