AUD/USD Forecast: Corrective advance could turn into a bullish run
AUD/USD Current Price: 0.7113
- The Reserve Bank of Australia pledged patience but removed 2023 from its statement.
- Rallying Wall Street provided support to the aussie in the last trading session of the day.
- AUD/USD is trading near a daily descendant trend line coming from this year high.
The AUD/USD pair kept recovering on Tuesday, peaking at 0.7122, its highest in a week. The Reserve Bank of Australia had a monetary policy meeting at the beginning of the day and has kept the official cash rate on hold at 0.1%, as widely expected. However, speculation surged about the central bank hiking sooner than 2024 anticipated, as Australian inflation keeps surging. Governor Philip Lowe said that in underlying terms, it is still low at 2.1%.
However, Lowe added that “the board is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2.5% and for only a gradual increase in wages growth,” removing “at the end of 2023” remarked in the previous statement. The pair maintained its strength through the American afternoon, supported by rallying US equities.
Australian data was positive, although unimpressive. The November AIG Performance of Services Index printed at 49.6, better than the previous 47.6 although still indicating contraction. The Q3 House Price Index surged 21.7% YoY and 5% QoQ. The country will not publish relevant macroeconomic data on Wednesday.
AUD/USD short-term technical outlook
The AUD/USD pair peaked at a daily descendant trend line coming from this year high at 0.7555, consolidating a few pips below it. The advance could be seen as corrective in the daily chart, as the pair keeps developing below all of its moving averages, while technical indicators hold within negative levels, barely correcting extreme oversold conditions.
However, the near term picture suggests that the pair may recover further. In the 4-hour chart, it has advanced above a now flat 20 SMA, while technical indicators consolidate well above their midlines, retreating modestly from intraday highs. The mentioned trend line stands at 0.7120, the level to clear for bulls to become more confident.
Support levels: 0.7075 0.7030 0.6990
Resistance levels: 0.7125 0.7170 0.7210
View Live Chart for the AUD/USD