The Australian dollar strengthened and hit around $0.67, its highest level in four weeks. This strengthening came after the Reserve Bank of Australia raised interest rates again. The decision came as a surprise to analysts who were arguing over the end of the rate hike cycle.
In the first quarter of 2023, Australian consumer inflation was 7%, below a 30-year high of 7.8% in the previous quarter, but above expectations, which were at 6.9%. At the same time, the country’s economy grew by only 0.2% in the first quarter, which was the slowest growth rate in the last six quarters and fell short of the expected growth forecast of 0.3%. The weakening of household consumption was the main reason for this low growth rate.
AUD/USD Weekly Forecast June 12 — 16, 2023
Since the beginning of May last year, the Reserve Bank of Australia has already held 12 meetings at which it raised interest rates. The central bank said the rate hike would boost confidence that inflation would return to its target within a reasonable timeframe. The bank also noted that additional tightening of monetary policy may be required.
The Reserve Bank said it does not expect inflation to return to the top of its target range of 2% to 3% until June 2025. This is due to concerns about accelerating inflation in the services sector and low productivity growth. The minutes note that “Members agreed that further increases in interest rates may be required, but this will depend on further developments in the economy and inflation.”
Currency pair Australian Dollar to US Dollar AUD/USD completes the trading week near the area of 0.6717. The pair continues to move as part of the development of the correction and the long-term downward channel. Moving averages indicate a bearish trend. Prices are again testing the area between the signal lines, which indicates pressure from the sellers of the asset and a potential continuation of the fall in the value of the currency pair. At the moment, we should expect an attempt to develop a bullish correction and test the resistance area near the level of 0.6765. Then, a rebound and continued fall of AUD/USD with a potential target below 0.6095 in the foreign exchange market.
An additional signal in favor of the fall of the pair on Forex will be a rebound from the upper border of the descending channel. The second signal will be a rebound from the downtrend line on the relative strength index (RSI). Cancellation of the option of falling the AUD/USD currency pair in the current trading week June 12 — 16, 2023 will be a strong growth and a breakdown of the level of 0.6875. This will indicate a breakdown of resistance and a continuation of the rise of the Australian Dollar on Forex with a potential target at the level of 0.7275. A confirmation of the development of the decline will be a breakdown of the support area and the closing of prices below the level of 0.6535.
AUD/USD Weekly Forecast June 12 — 16, 2023 suggests an attempt to develop a bullish correction and test the level of 0.6765. Further, the continuation of the decline of the currency pair below the level of 0.6095. In favor of the fall of the pair in the current trading week, a test of the trend line on the relative strength index (RSI) will come out. Cancellation of the reduction option will be a strong growth and a breakdown of the 0.6875 area. This will indicate a breakdown of the resistance area and continued growth of the pair with a target above 0.7265.
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