Daily Price Outlook
The AUD/USD is currently trading at 0.6685, having fallen by 0.49% in the last 24 hours. The currency pair experienced a drop following the release of the Reserve Bank's March meeting minutes, which revealed that officials were considering pausing interest rate increases in light of decreasing inflation and economic pressures.
RBA Minutes and AUD/USD
The Reserve Bank of Australia (RBA) released the minutes of its March monetary policy meeting early on Tuesday morning. During the meeting, the board discussed the need to potentially pause the cycle of rate increases, but also noted that Australia's inflation remained high, the labor market was tight, and wage growth had picked up.
However, RBA officials only considered the possibility of a 25 basis point (bps) increase in rates, despite recent inflation in the Australian economy.
The minutes also revealed that policymakers were concerned about the potential for fluctuations in the monthly Consumer Price Index (CPI), which slowed from its peak of 8.4% in December.
Despite this, the RBA has not yet reached its target range for inflation and may continue to hike rates soon. However, the RBA minutes were less hawkish than expected, which led to a drop in the AUD/USD currency pair.
FOMC meeting in focus
On Tuesday, the US Dollar Index (DXY) is up by 0.12% at 103.40, following the state-backed purchase of Credit Suisse by UBS, which eased concerns about a global banking crisis. As traders cautiously move back into riskier assets, the dollar has regained some ground.
The decision of the Federal Reserve on Wednesday is the most significant market event this week. The market expects that the Fed will not raise interest rates by more than 25 basis points (bps), as their priority is to restore investors' confidence. Therefore, the dollar is struggling to maintain its upward trend in recovery.
CME Group's FedWatch tool shows that as of Tuesday, there is a roughly 75.3% chance of a 25 bps hike by the Fed. However, the remaining 24.7% are against rate hikes and believe that Chairman Jerome Powell should halt his hawkish tightening campaign in light of the rising bank failure.
If the Fed decides to keep interest rates steady to prevent the effects of rising banking stress, it could benefit the AUD/USD.
AUD/USD Intraday Technical Levels
Pivot Point: 0.6704
AUD/USD – Technical Outlook
The AUD/USD pair is currently trading bearishly below the 0.6665 level and is approaching its second target at 0.6550. It is moving within a bearish channel, increasing the chances of further bearish corrections, with a possible decline towards 0.6400.
The bearish trend is being supported by the EMA50, and negative momentum may be required to break through and reach the expected target.
However, if the pair manages to surpass the 0.6665 level, it could prevent the anticipated decline and initiate recovery attempts, targeting 0.6780 initially. The expected trading range for the day is between the support level of 0.6500 and the resistance level of 0.6620.
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