RBA Minutes Out – Have AUDUSD Buyers Ran Their Course?

The USD to AUD rate has been stabilizing above 0.6650 in recent days, but it appears that buyers are growing tired, as all attempts to establish AUD/USD above 0.67 have resulted in sellers driving the price lower. Today’s meeting minutes from the RBA didn’t provide much help either.

The RBA kept the cash rate unchanged at 4.35% in the last meeting

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Last week’s decline in the US dollar across various currency pairs followed the release of the US CPI report, which, while meeting expectations, reinforced the market’s anticipation of forthcoming rate cuts by the FOMC. This reaction has cemented predictions for rate reductions by the Federal Reserve, fully pricing in cuts for September and December, however AUD/USD hasn’t been able to hold gains above 0l.67 which is worrisome.

AUD/USD Chart Weekly – The 100 SMA Is Rejecting the Price AgainChart AUDUSD, W1, 2024.05.20 21:16 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

US Dollar Outlook

  • US CPI Impact: The CPI report, aligning with forecasts, has underscored the market’s confidence in a dovish shift from the Federal Reserve. This has led to the pricing in of rate cuts, which has weakened the USD as investors anticipate a more accommodative monetary stance.
  • Risk-On Sentiment: With the expectation of rate cuts, investor appetite for riskier assets has increased, benefiting equities and risk-sensitive currencies while putting downward pressure on the USD.

AUD/USD Outlook

  • Australian Employment Data: The AUD came under pressure following the release of weaker-than-expected employment data from Australia. This initial reaction saw a dip in the AUD, but broader market conditions suggest this may be a buying opportunity for bulls.
  • Support from Risk Sentiment: Given the prevailing risk-on environment and the general weakness of the USD, the AUD/USD pair could be poised for further gains. Investors might look past the temporary setback from the employment data, focusing instead on the broader trend driven by global risk sentiment and the US dollar’s trajectory.

Technical Analysis AUD/USD

  • Support Levels: The immediate support zone to watch is around the recent lows around 0.6640-50 whith has been holding for several days, where the pair reacted to the employment data. Should this support hold, it would reinforce the case for a dip-buying opportunity.
  • Resistance Levels: On the upside, AUD/USD would need to break through recent highs and the 100-weekly SMA (green) to confirm a continuation of the bullish trend. Key resistance levels include 0.67 and 0.6730.

Reserve Bank of Australia Meeting Minutes

  • Considered whether to raise rates, judged case for steady policy the stronger one
  • Board agreed difficult to either rule in or rule out future changes in the cash rate
  • Flow of data had increased risks of inflation staying above target for longer
  • Board expressed limited tolerance for inflation returning to target later than 2026
  • Staff forecasts were considered sound, presented credible path back to target
  • Board noted forecasts were predicated on noticeably higher path for the cash rate
  • Rate rise could be appropriate if forecasts proved overly optimistic
  • Risks around the forecasts were judged to be balanced
  • Importantly, inflation expectations remained well anchored
  • Reasonable to look through short-term variation in inflation to avoid “excessive fine tuning”
  • Labour market had proved tighter than expected, consumer demand weaker
  • Financial conditions in Australia were judged to be restrictive
  • Risks to global growth had become more balanced, outlook for US and China revised upward

AUD/USD Live Chart

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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