- Analysts expect the RBA to raise rates by 50bps next week.
- The RBA might continue raising rates to reduce currency weakness against the US dollar.
- Bulls are attempting to take over above the 30-SMA in the charts.
Today’s AUD/USD price analysis is bullish. A Reuters poll indicated that Australia’s central bank would raise interest rates by another half-point on Tuesday and raise borrowing costs more than anticipated in its most aggressive tightening cycle since the 1990s.
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Reserve Bank of Australia (RBA) Governor Philip Lowe moderated his forecast for additional rate increases at the August meeting because they were getting close to the anticipated neutral rate of 2.50%, which neither boosts nor restricts economic activity.
However, several central banks are likely to raise rates to stop their currencies from depreciating more against the US dollar. On Wednesday, the Australian dollar, which has lost nearly 12% of its value this year, hit its lowest point in two years.
“A lot of global interest rate expectations are being set in the United States,” said Tony Morris, head of Australia and New Zealand economics at Bank of America.
“If the Reserve Bank doesn’t maintain the current pace, then further currency weakness will feed through into a much faster pace of domestic inflation.”
Peak interest rates may increase again because of inflation, which is currently at a 21-year high of 6.1%.
AUD/USD key events today
Investors are anticipating the release of the US Core Personal Consumption Expenditure (PCE) Price Index. It monitors changes in the price of consumer products and services bought for consumption, except for food and energy. It is an important instrument for monitoring inflation and changing purchasing patterns.
AUD/USD technical price analysis: Shift in sentiment from bearish to bullish
The 4-hour chart shows the price pushing above the 30-SMA and the RSI above 50. This is a sign that control is going to the bulls. Bulls took over at the 0.6375 support level and pushed the price to the 30-SMA and 0.6500 resistance zone. After some consolidation, the price broke above and retested the SMA.
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However, it has not gone far enough from the resistance zone to confirm a new bullish trend. If bulls keep control, the price will likely hit the 0.6600 key resistance level. If bears return, the price could fall to the 0.6375 support level.
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Saqib Iqbal
