- The AUD/USD pair recovers and approaches 0.6500 as the PBOC maintains a dovish policy on interest rates.
- The Fed is expected to keep interest rates unchanged at 5.25-5.50% as US inflation has been falling steadily.
- AUD/USD rebounds after discovering buying interest near horizontal support around 0.6364.
The pair AUD/USD recorded a recovery until approaching the psychological resistance of 0.6500 late in the European session. The Australian asset gained strength after the People’s Bank of China (PBOC) left its one- and five-year prime lending rate unchanged at 3.45% and 4.20%, respectively.
The PBOC was expected to maintain a dovish interest rate policy as the Chinese economy comes under pressure due to upside risks of deflation. Further expansion of the policy would support the economy to find a balance amid a gloomy economic outlook.
Meanwhile, the most important development in the currency space is the interest rate decision by the Federal Reserve (Fed). The US central bank is expected to keep interest rates unchanged at 5.25-5.50%. With US inflation continuing to fall while economic resilience remains, the Fed has the opportunity to skip the policy tightening regime for the second time in its current tightening cycle.
The AUD/USD pair rebounds after discovering buying interest near the horizontal support drawn from the August 17 low around 0.6364 on a two-hour scale. The Australian Dollar is stabilizing above the 20-day EMA, which is trading around 0.6340. Potential resistance is drawn from the August 15 high at 0.6522.
The Relative Strength Index (RSI) (14) jumps above 60.0, indicating that bullish momentum has been triggered.
A decisive break above the August 15 high around 0.6522 will push AUD towards the August 9 high at 0.6571. If the latter is broken, AUD will head towards the August 10 high at 0.6616.
On the other hand, if the Australian asset falls below the lows around 0.6360 on August 17, further declines would occur. This would expose the Australian Dollar to the support of the round level of 0.6300 followed by the November 3, 2022 low at 0.6272.
AUD/USD 2-hour chart
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
