- RBA Governor Michelle Bullock said the central bank will not hesitate to raise interest rates.
- The probability of an RBA rate cut in November fell to 46%.
- The US dollar weakened as markets focused on the prospect of a Fed rate cut.
AUD/USD forecast shows strong bullish sentiment as Aussie climbs after comments from Reserve Bank of Australia. Meanwhile, the dollar eased as markets focused on the likelihood of a September Fed rate cut.
-Are you looking for automated trading? Check out our detailed guide-
RBA Governor Michelle Bullock said on Thursday that the central bank will not hesitate to raise interest rates to control inflation. Her remarks come after a recent inflation report showed an easing of price pressures. Markets have increased the likelihood of an RBA cut in November. Since then, however, policymakers have maintained a cautious tone, saying core inflation remains high.
After these remarks, the probability of a rate cut in November fell to 46%. Meanwhile, Australia’s Westpac dropped its forecasts for its first rate cut from November to February next year. Significantly, the Reserve Bank of Australia has not raised interest rates as much as most major central banks. As a result, policymakers believe they should keep rates high for longer despite the recent wave of rate cuts.
Meanwhile, the US dollar weakened as markets focused on the prospect of a Fed rate cut. After last week’s jobs report, investors paid in full for the first rate cut in September. Moreover, they moved from the expected 25 bps to 50 bps. However, the numbers have declined as fears of a recession have eased. Still, markets now have more confidence that the Fed will start cutting rates soon.
The next major US inflation report will be released next week. Another softer reading will boost bets on a rate cut in September.
AUD/USD key events today
AUD/USD Technical Forecast: Bears lose control after bullish RSI divergence
On the technical side, the AUD/USD price has broken above the 30-SMA, indicating a change in bullish sentiment. This move follows the bullish divergence of the RSI which indicated a weakening of the bearish momentum. As a result, the bulls regained enough strength to take control by pushing the price beyond the SMA.
-If you are interested in Forex day trading, please read our getting started guide-
However, the price must make higher highs and lows to confirm the bullish trend. At the moment, the bulls are facing resistance at 0.6550. A break above this level will allow the price to climb to the key psychological level of 0.6700.
Do you want to trade Forex now? Invest in eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
