Home AUD/USD Weekly Forecast: Inflation Peak Pushing for Hawkishness
AUD/USD Forecast

AUD/USD Weekly Forecast: Inflation Peak Pushing for Hawkishness

  • Australia’s inflation came in higher than expected in the September quarter.
  • Investors are waiting to see if the RBA will get more aggressive after the inflation data.
  • Markets are expecting a 75bps rate hike from the Fed.

The AUD/USD weekly forecast is bullish as markets expect a possible surprise hike from the RBA. However, the dollar’s strength may undermine the bulls.

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Ups and downs of AUD/USD

The pair had a busy week with news releases from Australia and the US. More attention was given to Australia’s inflation which will determine the RBA’s next move. Australian inflation raced to a 32-year high last quarter as the cost of home building and gas surged, a shock result that stoked pressure for a return to more aggressive rate hikes by the country’s central bank.

Next week’s key events for AUD/USD

AUD/USD weekly forecast

AUD/USD weekly forecast Next week will be packed with weighty economic releases from Australia and the US. Investors will pay more attention to the RBA meeting and the Fed meeting.

The Reserve Bank of Australia is under pressure ahead of its policy meeting on Tuesday.

Investors started to believe peak rates may be approaching due to its decision to cut raises to a quarter-point pace earlier this month.

However, data released on Wednesday showing a startling increase in Australian inflation to a 32-year high implies the RBA has fallen behind and persuades Governor Philip Lowe to make an embarrassing U-turn.

When the Federal Reserve meets on November 1-2, a fourth consecutive big 75bps interest rate increase is largely anticipated. Investors are now concentrating on whether the Fed will limit the pace of future hikes.

AUD/USD weekly technical forecast: Footing above 30-SMA after a bullish divergence

AUD/USD weekly forecast

The daily chart shows the price trading above the 22-SMA and the RSI around 50. Bulls have taken control by pushing the price above the 22-SMA, which has been respected as resistance for some time. The price collapsed to the 0.6204 level, where it found strong support. The RSI showed weakness in the bearish trend when it made a bullish divergence.

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Bulls took control at this level and will hold on to that control until the price returns to trading below the 22-SMA. The price has paused at the 0.6483 resistance level and has retested the recently broken SMA. In the coming week, if bulls keep control, the price will likely push off the 22-SMA and break above 0.6483.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.