AUD/USD Forecast: Next stop comes at 0.6700

AUD/USD added to recent gains and revisited 0.6680.
Further improvement in the risk complex propped up AUD.
Investors continued to assess the RBA’s hawkish hold.

Pablo Piovano FXStreet

AUD/USD extended its recovery for the second day in a row, testing the upper-0.6600s, or multi-session tops, on the back of improved sentiment in the risk-related markets, extra weakness in the US Dollar (USD), and further adjustments to the recent RBA meeting.

The broader appetite for risk assets weighed on the Greenback once again, sponsoring the third consecutive pullback in the USD Index (DXY) amidst the absence of activity in the US markets.

Adding to gains in the Aussie dollar came minor advancements in copper and iron ore prices, both of which have maintained their consolidation so far this month.

In terms of monetary policy, the Reserve Bank of Australia (RBA), like the Fed, is among the last major central banks to adjust its stance. The RBA maintained a hawkish position on Tuesday, as expected, keeping the official cash rate (OCR) at 4.35% and indicating flexibility in its future decisions.

During the press conference, Governor Bullock confirmed that the board discussed the possibility of rate hikes while ruling out rate cuts. Furthermore, the bank remains vigilant on inflation, indicating a reluctance to ease policy unless necessary.

On the latter, the RBA emphasized that inflation remains persistently above target and introduced a new commitment to take necessary actions to bring inflation back within the target range.

Looking forward, the money markets foresee around 20 bps of easing by May 2025, with the possibility of rate hikes in August, September, and November not completely ruled out.

The divergence between potential Fed easing and the RBA's likely prolonged restrictive stance could support AUD/USD in the short term.

However, concerns about the sluggish momentum in the Chinese economy could hinder a sustainable recovery in the Australian currency as China continues to struggle post-pandemic.

AUD/USD daily chart

AUD/USD short-term technical outlook

If the current trend continues, AUD/USD may reach its May peak of 0.6714 (May 16), followed by the December 2023 high of 0.6871 and the July 2023 top of 0.6894 (July 14), all before the important 0.7000 yardstick.

On the other hand, bearish attempts may drive the pair to test the June low of 0.6574 (June 10) prior to the important 200-day SMA of 0.6546. A deeper decline could unveil a visit to the May low of 0.6465 and the 2024 bottom of 0.6362 (April 19).

In general, the uptrend should continue while AUD/USD trades above the 200-day SMA.

The 4-hour chart suggests a continuation of the positive trend in the near term. That said, the initial barrier appears at 0.6714, ahead of 0.6728 and 0.6759. Immediate support comes at 0.6574, followed by 0.6558. The RSI rose to around 67.

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.