- The AUD/USD pair resumes its uptrend after hitting lows around 0.6850.
- The RBA raised rates 25 basis points and expects further cash rate hikes.
- AUD/USD Price Analysis: Bullish, could test 0.7000 in the short term.
The Australian dollar (AUD) regained some ground against the US dollar (USD) after the Reserve Bank of Australia (RBA) hiked rates by 25 basis points in the Asian session, triggering a jump to fresh two-day all-time highs at 0 .6951. However, strong economic data from the US increased the likelihood of further rate hikes by the Fed. As a result, AUD/USD pulled back a bit, but is still up 0.52 and trades at 0.6920.
AUD/USD remains supported by Reserve Bank of Australia policy decision
The AUD/USD maintains its gains. The RBA’s decision to hike rates to the 3.35% threshold keeps the Australian dollar (AUD) in positive territory, holding on to gains above the psychological 0.6900 level. The RBA reiterated that further hikes would be necessary as core inflation is higher than expected, as the central bank tries to rein in high inflation to its 2-3% target.
ANZ analysts expect the RBA to continue raising the cash rate to 3.85%. “Today’s statement from the RBA indicates further rate hikes are in the offing. We continue to expect the cash rate target to rise another 25 basis points in March and then to 3.85% in May 2023. We continue to see risks to that maximum tilted to the high side given the momentum of inflationary pressure.”
Other than this, investor eyes would dissect every word of US Federal Reserve (Fed) Chairman Jerome Powell, who would cross the wires around 17:00 GMT. Strong US economic data released since the first week of February would likely keep pressure on the Fed for price stability. The staggering jobs report for January has opened the door for further tightening.
Earlier this morning, Minnesota Fed President Neil Kashkari stated that he expects the Fed Funds rate to be around 5.4% due to the stronger-than-expected labor market report that showed that the US central bank needs to keep raising rates.
AUD/USD Technical Analysis
From a technical point of view, the AUD/USD pair fell to 5-week lows, but found support around the 0.6850 zone and recaptured the 50-day EMA which sits at 0.6876. However, for the AUD/USD to resume its uptrend, it needs a daily close above 0.6948, which would expose the pair to more buying pressure. That being said, the next resistance for the A UD/USD would be the 20-day EMA at 0.6975, followed by the psychological figure of 0.7000, before the February 3 high at 0.7080.
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.
