- Market participants are eagerly awaiting Powell’s speech before Congress.
- The US released data that revealed weaker growth in the services sector.
- Data from Wednesday show that Australia had slower economic growth in Q4.
Today’s AUD/USD forecast is bullish as the dollar weakens ahead of Powell’s testimony to Congress. This weakness extended from the previous session when the US released unfavorable economic data.
–Are you interested in learning more about CFD brokers? Check out our detailed guide-
Market participants are eagerly awaiting Powell’s speech to Congress, which could contain clues about the Fed’s policy outlook. Powell is likely to reiterate that the Fed is in no rush to cut interest rates. However, any dovishness could weaken the dollar further, allowing AUD/USD to rally.
The dollar’s weakness began on Tuesday when the US released data that revealed weaker growth in the US services sector. Consequently, markets have gained confidence that higher interest rates are slowing the economy. Therefore, the Fed may be more inclined to start cutting interest rates in June.
Similarly, rate cut bets rose in Australia after data on Wednesday showed slower economic growth in Q4. Higher interest rates in Australia are starting to dampen economic growth. At the same time, inflation in the country is slowing down, which prompted the RBA to start thinking about the first rate cut. GDP grew by 0.2% in Q4, missing forecasts for growth of 0.3%. The report highlighted the rising cost of living for Australian consumers.
Notably, the RBA remains relatively hawkish despite falling headline inflation. According to the central bank, services inflation remains persistent, so it needs higher interest rates. As a result, markets expect the first RBA rate cut to come in August.
AUD/USD key events today
- US ADP Employment change excluding agriculture
- Fed Chairman Powell testifies
- JOLTS Job Opens
AUD/USD Technical Forecast: Bulls take lead after bullish divergence.
On the technical side, there was a change in sentiment to the bullish side as the price broke above the 30-SMA. At the same time, the RSI broke above the 50 mark and is now trading in bullish territory. The change in sentiment comes after the price failed to make a new low and the RSI made a bullish divergence.
–Are you interested in learning more about MT5 brokers? Check out our detailed guide-
In the previous downtrend, although the price broke below the previous low, it failed to close below. Therefore, he made a big fuse showing that the bulls are causing a further decline. Shortly thereafter, the bulls gained momentum and broke above the 30-SMA resistance. However, to confirm this new direction, the price must make a higher high above the key resistance level of 0.6530.
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.
