AUD/USD Forecast: Edging Higher as Australian Home Prices Rise

• Traders are preparing for a busy week of central bank meetings.

• Australian home prices increased for the second consecutive month in April.

• The unexpected drop in China’s manufacturing activity in April weighed on risk sentiment.

Today’s AUD/USD forecast is slightly bullish. In April, Australian home prices increased for the second consecutive month. The country’s real estate market may have bottomed out ahead of Tuesday’s central bank rate announcement.

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According to CoreLogic, prices nationwide were up 0.5% in April compared to March, when values were up 0.6%. This suggests that Australian home prices have bottomed out. This bottom comes after a 9.1% decline from May 2022 to February.

Currency markets were mostly flat on Monday due to holidays in most of Asia, which resulted in light trading. At the same time, traders were preparing for a busy week of central bank meetings.

Last week, AUD/USD dropped 1.1% to a seven-week low of $0.6573. However, it has since found strong support at the March low of $0.6564.

An unexpected drop in China’s manufacturing activity in April hurt risk appetite. The weekend report that big American banks were competing to buy First Republic Bank also weighed on risk sentiment.

Elsewhere, Goldman Sachs anticipates the Fed to indicate a pause in June. This pause will come after it delivers a quarter-point raise on Wednesday. According to Goldman, the main focus in the Fed statement will be future guidance.

AUD/USD key events today

Investors will watch the ISM manufacturing PMI from the US, showing the level of business activity in the manufacturing sector. The value is expected to go up to 46.7 from 46.3.

AUD/USD technical forecast: Bulls lacking momentum to crack 0.6650

AUD/USD has broken above the 30-SMA resistance in the 4-hour chart. At the same time, the RSI has gone above 50, pointing to a shift in sentiment from bearish to bullish. This shift comes after the price found support at the 0.6575 level. 

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Before breaking above the SMA, the bears had already shown signs of weakness. The RSI had made a bullish divergence with the price. This allowed bulls to take charge. However, they are now approaching the 0.6650 resistance. 

The price might pause or break above this level. A break above would likely retest the 0.6700 resistance.

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