Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6650.
- Add a stop-loss at 0.6450.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6450.
- Add a stop-loss at 0.6650.
The AUD/USD exchange rate rose for the third consecutive day following the release of the Reserve Bank of Australia (RBA) minutes and Jerome Powell's latest statement. It rose to 0.6550, up from last week’s low of 0.6454.
The RBA published relatively hawkish minutes, which provided more information on the latest minutes. In that meeting, officials left interest rates unchanged at 3.85% as officials waited for more information on inflation.
Officials also agreed that more interest rate cuts will be warranted in the future if inflation continues moving downwards.
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On the positive side, the Australian Bureau of Statistics (ABS) will soon change the frequency of how it releases the country’s inflation data. Like other countries, it will begin to publish a monthly report, rather than the current quarterly frequency. This will provide the RBA with more information on prices whenever it delivers its interest rate decision.
The AUD/USD exchange rate rose after the Federal Reserve Chair delivered a muted statement. Unlike in the other statements, Jerome Powell avoided talks on monetary policy in his speech on Tuesday.
The Fed, like the RBA, has been cautious in its monetary policy statements. It as avoided cutting interest rates this year, citing the potential impact of Donald Trump’s trade war.
There will be no major catalyst for the AUD/USD exchange rate on Wednesday. The only major data to watch will be the upcoming US existing home sales and mortgage information. While important, these numbers will likely not have a major impact on the pair.
AUD/USD Technical Analysis
The daily chart indicates that the AUD/USD exchange rate has been on a gradual upward trend since April. It formed an ascending channel and moved above the 50-day and 100-day Exponential Moving Averages (EMA).
The pair has moved to the 61.8% Fibonacci Retracement level. At the same time, the MACD indicator as formed a bearish divergence pattern as it has continued falling as the price rises.
The AUD/USD pair is likely to remain within this ascending channel on Wednesday as bulls target its upper boundary at 0.6600. A move above that level will point to more gains, potentially to 0.6650.
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