The Central Bank of Australia announced today that it will maintain the current interest rate of 4.35%, as anticipated by analysts. However, the bank’s management raised concerns about persistently high inflation and hinted that further rate hikes may be necessary. This cautious yet firm stance indicates that any possibility of policy easing in the near future is unlikely. As a result, the Australian dollar has witnessed a rally, bouncing back from its 2024 low.
A closer look at the daily AUD/USD chart reveals a potential bullish momentum if it continues unabated. Today’s trading session might witness two significant patterns:
– A bullish engulfing candlestick pattern.
– A bullish divergence in the price action.
Moreover, the current price of the AUD/USD pair is hovering around the crucial level of 0.6510. This level has acted as both support and resistance for the currency pair since mid-2023, as evident from the multiple instances marked by the arrows in the chart. The ability of the AUD/USD price to consolidate above this key level indicates a strong demand for the Australian dollar. Furthermore, this could give rise to a false bearish breakdown of the 0.651 level on the chart and potentially prompt the bulls to push the price back towards the ascending channel (shown in blue) that has been in place since last fall.
From a technical analysis standpoint, the likelihood of a bullish scenario is heightened by certain factors. First, the current low of the year (point C) coincides with the 0.382 Fibonacci level of the A→B impulse movement. This alignment suggests a potential support zone for the AUD/USD pair. Additionally, traders can benefit from FXOpen’s extensive offering, including access to over 50 forex markets round the clock. With low commissions, deep liquidity, and spreads as low as 0.0 pips, FXOpen ensures a seamless trading experience.
It is important to note that the views expressed in this article solely represent the opinion of the entities operating under the FXOpen brand. The article should not be considered as an offer, solicitation, or recommendation for any products or services provided by these entities. Furthermore, it does not constitute financial advice and should not be construed as such. Traders and investors are advised to conduct their own research and consult with a financial advisor before making any investment decisions.
While the Central Bank of Australia’s decision to maintain its current interest rate did not come as a surprise, its warning about the possibility of future rate hikes has implications for the Australian dollar. The AUD/USD pair has responded positively to this relatively hawkish sentiment, showing signs of a potential bullish trend. Technical analysis supports this outlook, with various indicators pointing towards a strengthening demand for the Australian dollar. As always, traders are reminded to exercise caution and make informed decisions based on thorough analysis.
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