The AUD/USD uptrend on the hourly timeframe turned out not to be long-term. However, the view on the Australian dollar remains positive in the medium-term outlook.
Australia's central bank recently kept its key interest rate unchanged. 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 borrowing levels. About 60% of experts expected this 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.
Such rhetoric should support the AUD/USD currency pair, since the rate hike in Australia might resonate with its slowdown in the U.S.
Besides the central bank’s actions, the recently released statistics are also positive for the Australian dollar.
Australia's trade surplus widened in May amid rising gold, natural gas and coal exports. As a result, the country's tax revenues increased, along with its fiscal position.
According to the Australian Bureau of Statistics, the nation's surplus was 11.8 billion Australian dollars ($7.9 billion), exceeding market forecasts by 10.9 billion Australian dollars. The country's total exports rose by 4%, while imports increased by 2% over the past month.
Australia has experienced a monthly trade surplus since January 2018. However, its highest level was recorded only this May due to strong sales of iron ore and natural gas to the growing economies of the Asia-Pacific region.
Higher exports increase U.S. dollar to Australian dollar conversion, which has a direct impact on the exchange rate.
According to the technical analysis, the AUD/USD currency pair is within a wide flat. Despite the positive fundamentals, the prices are closer to the lower limit of the rectangle. Therefore, the current point is good for buying the Australian dollar.
The growth target will be the upper limit of the figure near the price of 0.680. A Stop-loss will be set at declining to the lower limit and updating the local low, which corresponds to the price of 0.659.
The AUDUSD currency pair is likely to rise:
Take profit – 0.680
Stop-loss – 0.659
This content is for informational purposes only and is not intended to be investing advice.
