The pair hit a six-month high of 0.6752, marking its fifth consecutive day of gains. The currency’s strength is largely due to market expectations that the Reserve Bank of Australia (RBA) could deviate from the global trend of cutting interest rates, raising them in response to rising inflationary pressures. May’s CPI figures have intensified discussions around monetary tightening.
Market sentiment is split between expectations of a rate hike and maintaining current rates at the next RBA meeting in August. High domestic yields are attracting international capital, boosting the Australian dollar and providing a refuge from political uncertainties in the US and Europe.
In addition, the weakening of the US dollar, underlined by the unimpressive economic data released on Friday, has also boosted the Australian dollar. These data reinforced the Federal Reserve's dovish stance on monetary policy.
Technical analysis of the AUD/USD pair
The market has established a broad consolidation pattern centered around 0.6723. Looking ahead, there is a possibility of an upward move up to 0.6822. Once this level is reached, a retracement to 0.6750 for a retest could occur, followed by a continuation of the upward trajectory towards 0.6858. This bullish outlook is supported by the MACD indicator, with its signal line positioned above zero and trending upwards.
The AUD/USD pair is currently challenging the 0.6757 level, with the potential to extend the rally towards 0.6806. Following this target, a pullback to 0.6757 could occur, setting the stage for another rise to 0.6822. The Stochastic oscillator, positioned above the 50 mark, suggests an imminent rise to 80, reinforcing the anticipated bullish momentum.
Traders and investors are closely watching developments, especially the upcoming RBA meeting, which could significantly influence the direction of the AUD/USD pair.
By RoboForex Analysis Department
Disclaimer
The forecasts contained in this document are based on the personal opinion of the author. This analysis cannot be considered as trading advice. RoboForex does not assume any responsibility for trading results based on trading recommendations and reviews contained herein.
