Australian inflation is next on the agenda

AUD/USD Current Price: 0.6878

• The RBA has left interest rates unchanged as expected. Australian inflation is next.
• Disappointing figures from the United States fueled speculation about another 50 basis point rate cut by the Fed.
• AUD/USD maintains positive tone near a new 2024 high of 0.6883.

The AUD/USD pair reached 0.6868 during Asian trading hours following the Reserve Bank of Australia (RBA) monetary policy decision, and later surpassed this level during the US session to hit a new 2024 high of 0.6883.

As widely expected, board members kept the Official Cash Rate (OCR) unchanged at 4.35%, a level set in November 2023. RBA Governor Michele Bullock then held a press conference, repeating her familiar hawkish message. Bullock confirmed that rates would remain unchanged for the time being, adding that the board did not expect any rate cuts in the near term as recent data had not “materially affected” the policy outlook. The hawkish bias came as no surprise to investors, and despite the general optimism, the two quickly retreated.

Meanwhile, the People’s Bank of China (PBoC) announced a series of measures to support the economy. On the one hand, the PBoC announced that it will cut the Reserve Requirement Ratio (RRR) by 50 basis points (bps) in the short term, and that it will cut the seven-day repo rate by 0.2%, without giving much more detail on the date. In addition, the central bank outlined plans to support the real estate market, including cutting interest rates on mortgages.

AUD/USD turned north after tepid US (US) data fueled speculation the Federal Reserve (Fed) could deliver another 50 basis points (bps) rate cut when it meets in November. Early on Wednesday, Australia is set to release its August monthly consumer price index, which is expected to come in at 2.8% after July’s 3.5%.

AUD/USD Short Term Technical Outlook

The daily chart for AUD/USD is showing strong upward momentum, supporting higher highs. Technical indicators have partially lost their bullish power, but continue to rise near overswrought readings. At the same time, the pair has risen well above bullish moving averages, with the 20 Simple Moving Average (SMA) more than 100 pips below current levels and well above the longer ones.

In the short term, and according to the 4-hour chart, the risk is tilted to the upside, although momentum has waned. Technical indicators have retreated modestly from near overbought levels, moving marginally lower, not enough to predict a new course south. At the same time, a bullish 20 SMA intraday continues to attract buyers, now providing dynamic support around 0.6830.

Support Levels: 0.6830 0.6775 0.6730

Resistance levels: 0.6910 0.6945 0.6980