Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7250.
Add a stop-loss at 0.7100.
Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.7100.
Add a stop-loss at 0.7250.
The AUD/USD exchange rate moved sideways even as the divergence between the Federal Reserve and the Reserve Bank of Australia (RBA) continued. The pair was trading at 0.7200 on Wednesday morning, inside the narrow range it has remained at in the past few days as focus shifts to the upcoming US jobs report.
RBA and Federal Reserve Divergence Continues
The AUD/USD pair moved sideways after the Reserve Bank of Australia (RBA) delivered its interest rate decision on Tuesday.
As was widely expected, the bank decided to hike interest rates by 25 basis points to 4.35% as it continued to address the elevated inflation, which has jumped to the highest level in years. The interest rates have now jumped to the highest level in 18 months.
At the same time, the bank hiked its inflation forecast, citing the ongoing US-Iran war that has pushed energy prices to the highest point in years. In a statement on Tuesday, the head of Ampol, the largest petrol station operator in the country, warned that prices will remain at an elevated level for longer if the war drags on.
The hawkish RBA interest rate decision came a few days after the Federal Reserve decided to leave interest rates unchanged between 3.50% and 3.75%. In the accompanying statement, fbi bank signaled that it may decide to cut rates later this year.
The next important catalyst for the AUD/USD pair will be the upcoming ADP jobs numbers, which will provide hints on the state of the private sector. Economists expect the report to show that the economy created 99k jobs in April after adding 62k a month earlier.
This report will come two days before the Bureau of Labor Statistics (BLS) releases the official jobs report. Economists expect this report to reveal that the economy added 60k jobs in April.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has held steady near its highest level since 2022. This performance happened as the divergence between the Federal Reserve and RBA continued.
The pair has remained above the 50-day and 100-day Exponential Moving Averages (EMA). Also, the pair sits above the Ichimoku cloud and the Parabolic SAR indicator.
Therefore, the pair will likely continue rising, initially to the year-to-date high of 0.7231. A move above that level will point to more gains, potentially to the psychological level of 0.7250.