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AUD Forecast: Australian Dollar Reacts Positively to RBA Minutes

AUD RBA

AUD gains momentum due to favorable RBA minutes and iron ore surge. Hawkish stance; monitor key levels for potential shifts.

The Australian Dollar (AUD) has reacted positively to the meeting minutes of the Reserve Bank of Australia (RBA) and the upward trend in iron ore prices. It’s worth noting that this rebound in the AUD doesn’t necessarily indicate a complete reversal.

The recent strengthening of the AUD against the USD is in response to relatively hawkish statements in the RBA meeting minutes. Some notable points from the release include

A limited tolerance for a slower return to the inflation target.

Recognition that the labor market has reached a turning point.

A willingness to consider further tightening if inflation persists.

Concerns about potential challenges to Australia’s economy from issues in China if not effectively contained.

AUD Forecast – Australian Dollar Reacts Positively to RBA Minutes

The weak Chinese economy has impacted the AUD despite implementing stimulus measures to promote growth. The forthcoming Chinese GDP report will introduce volatility to the AUD/USD pair.

On the export front, Australia’s primary export, iron ore, has seen a rally, providing additional support to the Australian Dollar. The release of US retail sales data later today will be of significance. If the data aligns with forecasts, the AUD may experience further gains. The Federal Reserve’s announcements throughout the trading day will provide insights into their stance in light of recent economic data and geopolitical factors, including the Israel-Hamas conflict. Diplomatic efforts to resolve the dispute have reduced risk aversion in global markets, contributing to the positive sentiment surrounding the AUD.

Regarding technical analysis, the AUD/USD price has faced challenges, surpassing the low point in November 2022 at 0.6272, forming a descending triangle pattern. A convincing break above the trendline resistance and the 50-day moving average could invalidate this pattern. Such a breakthrough could drive the AUD/USD pair higher, targeting levels beyond 0.6459.

Key Resistance Levels:

0.6500

0.6459

50-day moving average/Trendline resistance at 0.6358

Key Support Levels:

0.6272

0.6170

IG Client Sentiment Data indicates that retail traders currently hold net LONG positions on AUD/USD, with 80% of traders being long.

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