AUD/USD is rebounding from the support level

05 July 2023 151
AUD/USD is rebounding from the support level

The AUD/USD currency pair hit the lower limit of an uptrend on the hourly timeframe.

However, U.S. economic data, as well as declining global inflation indicate the potential for an opposite movement of the quotes. Certain support for the currency pair is provided by the reduction in the U.S. PCE price index and the decline in the country's June production to its lowest level since May 2020. Such data increases the probability of rate cuts in the U.S. for the foreseeable future, which will put pressure on the American currency.

Australia's central bank kept its key interest rate unchanged yesterday. The board is assessing the impact of more than a year-long tightening cycle on the economy and inflation, leaving room for future increases in the borrowing level. About 60% of experts expected such a decision from the regulator.

Andrew Boak, chief economist for Australia at Goldman Sachs Group, interpreted the meeting results as a hawkish hold on rates. Spot hikes are now expected in August, November, and December.

The RBA depends on the latest economic data. It closely monitors consumer spending, the labor market, business surveys, and inflation. While price increases in goods and household consumption are showing signs of declining, core prices remain higher than 6%, well above the bank's target of 2-3%.

The Australian dollar weakened yesterday, despite the regulator's actions, which were in line with the opinion of most analysts. However, there was a clear signal for further tightening. Thus, the Australian currency might recover in the coming days.

According to the technical analysis, the AUD/USD currency pair has hit the limit of its decline. There are no stimuli to break down the uptrend at the moment. The prices have removed the overbought on the main oscillators. Now the progressive upward movement might resume again.

The first growth target will be the level of 0.6690. Previously, it has already acted as support or resistance for the quotes. A Stop-loss will be set when the local low is updated and the uptrend is broken, which corresponds to the price of 0.6664. The implementation of such a scenario is possible in case of any shocks in the market.

The AUDUSD currency pair is likely to rise:

Take profit – 0.6690

Stop-loss – 0.6664

This content is for informational purposes only and is not intended to be investing advice.

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