AUD/USD Reacts at Key Support Levels Amid Central Bank

AUD/USD Reacts at Key Support Levels Amid Central Bank Inaction

The AUD/USD pair has shown a notable reaction around the critical 0.6500 area, aligning with the 61.8% Fibonacci level and dynamic trendline, following our previous analysis. This development coincided with the Reserve Bank of Australia (RBA) maintaining its Official Cash Rate (OCR) at 4.35% during its recent meeting, a decision widely expected by market participants. Governor Bullock's subsequent press conference refrained from providing clear guidance on future policy actions, reflecting the limited scope for further interest rate hikes amidst Australia's cost-of-living challenges.

Meanwhile, the US Dollar Index continues to weaken despite hawkish comments from Federal Reserve (Fed) Chair Jerome Powell, who emphasized the need for vigilant monitoring of inflation's trajectory toward the 2% core target. Fed Bank of Cleveland President Loretta Mester hinted at potential rate cuts later in the year, although she advised against hasty actions. Similarly, Fed Bank of Philadelphia President Patrick Harker supported the Fed's recent decision to maintain interest rates, foreseeing further declines in inflation.

Given these developments, our analysis suggests a potential uptrend for both the AUD and other currencies against the USD.


Our preference

Long positions above 0.65 with targets at 0.67 & 0.68 in extension.