- AUD/USD returned to 0.7600 after the RBA’s hawkish comments.
- As US stocks fall/recover after the Fed’s hawkish comments, the dollar has been higher of late.
- A bullish trend had been signaled when the RBA scrapped its “patience” recommendation, sending the pair higher.
The AUD/USD forecast is strongly bullish after the hawkish RBA. However, the Fed’s aggression may keep the gain limited.
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The AUD/USD pair is still trading at significant gains following the RBA’s hawkish interest rate decision, but it has pulled back from multi-month highs of above 0.7650 earlier and is now trading closer to 0.7600.
US bonds market
A pullback in US stock markets and a rise in US bond yields followed comments from Fed Vice Chair Lael Brainard suggesting a rapid rundown of the balance sheet could begin as early as May. In addition to AUD/USD, other major crosses/US dollar were also impacted by the drop in sentiment.
RBA’s hawkishness
The AUD/USD could end the session up 1.0% after technicals indicate a sharp break north of the Q4 2021 highs around 0.7550 during the Asia Pacific trade. As a result of the RBA’s retraction of its “tolerance” on rate hikes, Aussie bulls have taken control, and the market expects the first 25 basis point rate hike in June. Hence, the bulls will mark their next upside targets once the AUD/USD pair makes new yearly highs.
What’s next to watch the AUD/USD forecast?
With the pair having recovered over 6.0% from the mid-March lows below 0.7200, it won’t be a surprise if another 3-5% challenge those highs in the coming months. Fundamentally, it seems plausible that commodities prices could rise due to the Russo-Ukrainian war, equity markets will remain resilient, and the RBA will at least catch up to the rest of the G10 central banks.
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AUD/USD price technical forecast: Bulls holding above 0.7600
The AUD/USD price broke out of the range and posted fresh yearly highs above the 0.7600 level. However, the pair has shed off its gains in the last hour. But the pair maintains the bullish bias and remains supported by the 0.7600 level. If the bears pick the pace, the pair may fall towards 0.7550 ahead of the 0.7500 handle.
Alternatively, the upside trend may continue and test the 0.7700 handle ahead of 0.7800. The volume data shows that the bias is strongly bullish.
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Saqib Iqbal
