AUD/USD Current Price: 0.7233

  • The Reserve Bank of Australia surprised investors with a 50 bps hike.
  • Easing Treasury yields weighed on the greenback during the American session.
  • The AUD/USD pair could accelerate its advance once above 0.7245.

The AUD/USD pair strengthened during Asian trading hours, jumping to 0.7246 on the back of the Reserve Bank of Australia monetary policy decision. Policymakers decided to hike the cash rate by 50 bps to 0.85%, mentioning the economy’s resilience and a strong labour market as reasons to pull out financial support.

However, the statement also showed mounting concerns about price pressure, as it reads: “inflation in Australia has increased significantly,” adding that it’s higher than earlier expected. Continued price pressures are the result of both global and domestic factors, “including COVID-related disruptions to supply chains and the war in Ukraine” and the tight labour market.

AUD/USD gains were reversed amid the market’s risk-off mood, resulting in the pair falling to 0.7156 ahead of Wall Street’s opening. It then resumed its advance as the greenback eased alongside US government bond yields to settle in the 0.7230 region. Financial markets’ volatility reflects the uncertainty about the economic future, mostly related to aggressive quantitative tightening. Australia will not release macroeconomic data on Wednesday.

AUD/USD short-term technical outlook

From a technical point of view, the AUD/USD pair has chances of resuming its advance. The daily chart shows that it keeps trading between Fibonacci levels, attracting buyers on approaches to the 38.2% retracement of the April/May decline at 0.7145 while meeting sellers near the 50% retracement of the same slide at 0.7245.

In the mentioned time frame, technical indicators resumed their advances within positive levels, while the 20 SMA accelerated its advance well below the current level. Meanwhile, the longer moving averages stand a handful of pips above the current level, providing dynamic resistance.

In the 4-hour chart, the pair is battling above a flat 20 SMA while developing above the longer ones, hinting at further gains without confirming them. Technical indicators, in the meantime, are struggling to gain momentum around their midlines, falling short of confirming a near-term bullish continuation.

 Support levels: 0.7185 0.7140 0.7105

Resistance levels: 0.7245 0.7290 0.7330