- The Reserve Bank of Australia kept interest rates unchanged.
- Core inflation in Australia remains high at 3.5%.
- The dollar was vulnerable on US election day.
AUD/USD price analysis points to renewed bullish sentiment following hawkish remarks at the Reserve Bank of Australia’s policy meeting. Meanwhile, the dollar retreated as bets backed Harris to win the US presidential election.
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The Reserve Bank of Australia kept interest rates unchanged on Tuesday, noting that inflation remained too high. Moreover, Australia’s central bank warned that interest rates could remain high for longer.
Namely, the labor market remained resilient despite the high rates. Meanwhile, inflation decreased to 2.8% in the third quarter. However, core inflation remained high at 3.5%, keeping policymakers cautious. At the same time, market participants fully report the price reduction in May next year. After the meeting, the Australian dollar rose.
On the other hand, the dollar was vulnerable on the day of the US election as bets showed that Kamala was in a stronger position. Accordingly, traders canceled the Trump trade. There was a time when Trump was always ahead on the betting sites. This supported the dollar as its policies create a hawkish outlook for Fed policy.
Trump has proposed raising tariffs, among other changes that would increase inflation. Meanwhile, experts believe Kamal is likely to continue with most of Biden’s policies. In this case, the Fed would continue its rate-cutting cycle, weighing on the dollar.
The Federal Reserve will meet shortly after the election, and markets expect a 25 basis point rate cut. However, they will focus more on messages about future policy moves.
AUD/USD key events today
- US ISM services PMI
- US presidential election
- elections for the US Congress
AUD/USD Price Technical Analysis: Trend Reversal After Bullish Candlestick
From the technical side, AUD/USD the price is climbing after a reversal near the 0.6550 support level. The price is above the 30-SMA, showing that the bulls are in the lead. At the same time, the RSI broke above 50 to support a solid bullish momentum.
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The bulls strengthened enough to take control near the 0.6550 level. Here, the price made a bullish candle, signaling stronger momentum. Soon after, the price broke above the 30-SMA, confirming the reversal. Currently, the bulls are looking at the resistance level of 0.6650. If the price breaks above this level, it is likely to reach the 0.6700 resistance.
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