AUDUSD Forecast – Easing China COVID Restrictions, RBA Rate Hike Expectations Lifting Prices
The Australian Dollar is testing its highest level since mid-September early Monday. The main catalyst behind the rally are reports saying China is relaxing virus testing rules in some cities. Speculators are betting that the move signals more easing to come.
Other supportive catalysts are higher oil prices and the widely expected Reserve Bank (RBA) rate hike on Tuesday.
At 03:38 GMT, the AUDUSD is trading .6847, up 0.0052 or +0.77%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $67.35, down $0.05 or -0.08%.
Traders also seem to be shrugging off Friday’s hotter-than-expected U.S. Non-Farm Payrolls report. The news raised some concerns over the Fed’s ability to slow the size of its rate hikes beginning in December.
RBA Expected to Hike Benchmark Rate 25 Basis Points on Tuesday
Australian Dollar traders are also positioning themselves ahead of Tuesday’s Reserve Bank (RBA) rate statement and interest rate decision. A Finder survey of 40 experts and economists found almost 90 percent expect a 0.25 percentage point lift but opinions vary on the bank’s monetary policy trajectory in the next year.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through .6843 earlier in the session signaled a resumption of the trend. A move through .6641 will change the main trend to down.
The minor trend is also up. A trade through .6743 will change the minor trend to down. This will shift momentum to the downside.
The nearest support is the long-term 50% level at .6760. The closest resistance is the Sept. 13 main top at .6916.
Daily Swing Chart Technical Forecast
Trader reaction to .6795 is likely to determine the direction of the AUD/USD on Monday.
A sustained move over .6795 will indicate the presence of buyers. A move through the intraday high at .6850 will indicate the buying is getting stronger. This could trigger an acceleration into the Sept. 13 main top at .6916.
A sustained move under .6795 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend in the major 50% support at .6760, followed by the minor bottom at .6743.
A close below .6795 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day counter-trend sell-off.