Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7300.
Add a stop-loss at 0.7100.
Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.7100.
Add a stop-loss at 0.7300.
The AUD/USD exchange rate continued its strong upward trend, reaching its highest point since May 2022. It has risen in the past five consecutive weeks, helped by the ongoing divergence between the Federal Reserve and the Reserve Bank of Australia (RBA). It has soared by over nearly 22% from its lowest level in April last year.
RBA Interest Rate Decision Ahead
The AUD/USD pair continued rising as investors focused on the ongoing divergence between the Federal Reserve and the Reserve Bank of Australia (RBA).
In its interest rate decision, the bank decided to leave interest rates unchanged, with the accompanying statement pointing to a rate cut later this year if the economic deterioration continues.
The next important catalyst for the pair will be the upcoming RBA Interest rate decision on Tuesday this week. Economists expect the bank to deliver another rate hike in this meeting. If this happens, it will bring interest rates to 4.35%. It will be the third consecutive rate hike.
The RBA has become one of the most hawkish central banks in the western world as it delivered three rate hikes. This happened as inflation continued rising, with the most recent report showing that the headline Consumer Price Index (CPI) rose to 4.6% in March as energy prices surged.
The bank has embraced the hawkish tone as the Australian economy has maintained its resilience, with the most recent report showing that the economy expanded by 2.6% in the fourth quarter of last year. Also, the economy is operating at full employment, with the unemployment rate continuing to fall.
The next major catalyst for the pair will be the upcoming US non-farm payrolls data on Friday. Economists expect the upcoming report to show that the economy created 78k jobs in April, much lower than those added in March.
AUD/USD Technical Analysis
The weekly timeframe chart shows that the AUD/USD pair has been a strong uptrend in the past few months, moving from a low of 0.5915 in April last year to a multi-year high of 0.7230.
It recently crossed the important resistance level at 0.6935, its highest point in September 2024. The pair has remained above the 50-week and 100-week Exponential Moving Averages (EMA).
The Percentage Price Oscillator (PPO) and the Relative Strength Index (RSI) have continued rising in the past few months. Therefore, the path of the least resistance is bullish, with the next key target being at 0.7300.