AUD/USD Price Forecast: Looks like there is a bullish reversal
- The Australian Dollar gains further against the US Dollar as RBA’s Hauser warns of upside inflation risks.
- RBA’s Hauser said that the monetary policy is effective, but the inflation outlook remains deteriorated.
- The US Dollar is under pressure as the Fed will likely leave interest rates steady this month.
The Australian Dollar (AUD) extends its winning streak against the US Dollar (USD) on Wednesday, trading 0.26% higher at around 0.7015 in the early European trade. The Aussie pair strengthens following warnings from Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser, earlier in the day, that the “inflation outlook appears worse than forecast and slightly above expectations”.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | 0.12% | 0.00% | 0.02% | -0.25% | 0.19% | 0.18% | |
| EUR | -0.11% | -0.07% | -0.12% | -0.11% | -0.30% | 0.02% | 0.02% | |
| GBP | -0.12% | 0.07% | -0.06% | -0.06% | -0.23% | 0.09% | 0.09% | |
| JPY | 0.00% | 0.12% | 0.06% | 0.00% | -0.16% | 0.15% | 0.16% | |
| CAD | -0.02% | 0.11% | 0.06% | -0.01% | -0.17% | 0.16% | 0.16% | |
| AUD | 0.25% | 0.30% | 0.23% | 0.16% | 0.17% | 0.33% | 0.32% | |
| NZD | -0.19% | -0.02% | -0.09% | -0.15% | -0.16% | -0.33% | 0.00% | |
| CHF | -0.18% | -0.02% | -0.09% | -0.16% | -0.16% | -0.32% | -0.00% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
“Inflation has remained elevated for an extended period,” RBA Hauser said. She added, “Quarterly trimmed mean likely to exceed expectations.” Hauser further added, “Monetary policy effective, but inflation outlook deteriorates.”
RBA Hauser’s warning that price pressures could remain at elevated levels might prompt expectations of another interest rate hike by the central bank in the near term.
Meanwhile, the US Dollar trades with caution while the Federal Reserve (Fed) has entered a blackout period ahead of the policy decision later this month. The Fed is highly anticipated to leave interest rates unchanged in the range of 3.75%-4.00%.
AUD/USD Technical Analysis
In the daily chart, AUD/USD trades at 0.7014, holding just above the 20-period exponential moving average (EMA) at 0.6995, which suggests a mildly constructive near-term tone while the pair respects underlying trend support. Two upward-sloping support trend lines starting around 0.6904 and 0.6903 reinforce the notion of a gradually rising base, while the Relative Strength Index (14) at 50.96 stays close to neutral, hinting at balanced momentum rather than an impulsive move in either direction.
On the topside, immediate resistance appears at the nearer downward trend line starting from 0.7020, with a more significant barrier at the higher descending trend line drawn from 0.7138. On the downside, initial support is located at the 20-period EMA at 0.6995, ahead of the clustered rising trend-line supports around 0.6904/0.6903, where buyers are likely to defend the broader corrective advance.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
