Aussie ready to retest 0.7300

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It is likely that the pair will continue the uptrend as it is stuck above the two MAs. If this happens, the next key resistance will be at 0.7300

Bullish view

  • Set a buy-stop at 0.7250 and a take-profit at 0.7300.
  • Add a stop-loss at 0.7200.
  • Deadline: 1 day.

Bearish view

  • Sell ​​the AUD/USD pair and set a take-profit at 0.7100.
  • Add a stop-loss at 0.7280.

The AUD/USD pair continued after the surprise interest rate hike by the Reserve Bank of Australia (RBA). The pair is trading at 0.7220, which is close to its month-to-date high of 0.7287. It is up more than 5.66% from its low point in May.

RBA rate hike

In 2021, the RBA has spent most of the year talking about transitory inflation. At the time, it signaled that it would raise interest rates in either 2023 or 2024. As a result, the bank surprised many analysts when it reversed its dovish tone in May.

It implemented its first rate hike of 0.25% in May. And this week, the RBA surprised investors by raising interest rates by 0.50%. It was the first time it had hiked 0.50% since 2000. Moreover, it was the first time it had hiked rates in a row since 2010.

More importantly, the RBA has signaled that it will make further rate hikes this year as it continues to battle soaring inflation. Analysts believe he will push rates to 1.35% at his July meeting. Nevertheless, the risk is that an aggressive tightening will lead to a major deterioration in the economy.

For example, if banks pass rates on to borrowers in full, homeowners would have to pay an extra $295 per month for a $750,000 mortgage. This could be a blow for individuals given that wage growth has been a bit weak this year.

Once the RBA is over, the next key data to watch will be the upcoming US inflation data which is due Friday. Analysts expect data to show the country’s inflation moderated slightly in May this year.

AUD/USD Forecast

The AUD/USD pair has been in a strong uptrend since mid-June due to the strength of the US Dollar. It increased by more than 5.8% during this period. At the same time, the pair has formed an ascending channel pattern which is depicted in black. On Tuesday, he had a fake breakout after the RBA decision.

The pair moved slightly above the 25- and 50-day moving averages as the MACD nears neutral. It is slightly below the 50% retracement point.

Therefore, it is likely that the pair will continue the uptrend since it is stuck above the two MAs. If this happens, the next key resistance will be at 0.7300

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