The AUD/USD price has been in a strong bearish trend in the past few days as investors wait for the upcoming RBA interest rate decision. It is trading at 0.7200, which is about 1.15% below the highest level last week.
RBA decision preview
The RBA started its two-day monetary policy meeting on Monday and deliver its decision on Tuesday. Analysts expect that the bank will hike interest rates by 0.25% for the second straight month as it battles the rising consumer price index.
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Recent data shows that Australia, like other countries, is battling with the rising and persistent inflation. Prices rose by more than 5% in the first quarter and there is a likelihood that the trend is continuing in the second quarter.
At the same time, the labor market is still strong, with the unemployment rate currently at 3.9%. The labor market is also expected to keep strengthening, helped by the services sector.
In a recent statement, Philip Lowe, the RBA governor sounded more hawkish. He argued that a 15 basis point hike will be too small while a 50 basis point hike will be larger than normal. He added:
“It doesn’t preclude a bigger or a smaller number in the future, but we wanted to signal that, really, things are getting back to normal, it’s business as usual, we’re making a standard adjustment in interest rates.”
The RBA decision comes at a time when Australia has a new government. Jim Chalmers, the new Treasurer is now finalizing terms of reference and model for RBA review. The new policy will see more involvement by outsiders.
The next key catalyst for the AUD/USD pair will be the US consumer inflation data scheduled for Friday this week. Analysts expect the data to show that prices started to normalize in May.
AUD/USD forecast
The AUD/USD pair has been under intense pressure in the past few days as investors wait for the upcoming RBA decision. The pair has dropped to 0.7200, which is along the ascending trendline shown in black. The pair is between the 50% and 38.2% Fibonacci Retracement level while the MACD has pointed downwards.
Therefore, the pair will likely bounce back as bulls target the upper side of the ascending channel ahead of the upcoming RBA decision. If this happens, the next key resistance level to watch will be at 0.7282.
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Source: https://invezz.com/news/2022/06/06/is-the-aud-usd-a-buy-ahead-of-the-rba-decision/