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AUDUSD Market Update

8/3/2022 2:59 PM

The AUD/USD pair was up for more than three weeks, reaching 0.7045 but yesterday sharply corrected down to the middle line of Bollinger bands at 0.6940 on the back of the results of the last meeting of the Reserve Bank of Australia (RBA).

The regulator raised the rate by 50 basis points, bringing it to 1.85%, but at the same time, the head of the department, Philip Lowe, said there were no clear plans for further rate hikes, which investors perceived as a softening officials' positions. Experts believe that to reduce pressure on the economy, the central bank may again slow down the rate hikes to 25 percentage points or take a break. Also, economic forecasts were published: inflation in the country will peak around 7.75%, and not by 7.0%, as previously thought, while the gross domestic product (GDP) this year may grow by 3.25% instead of 4.2%. All this data put pressure on the Australian currency. However, it may be temporary, as the national economy remains stable, supported by a strong labor market and household demand: according to June data, retail sales in the country rose by 0.2%, despite price pressure on purchasing power.

On the contrary, estimates of the state of the US economy have deteriorated recently: last week, GDP data for the second quarter reflected a technical recession, which officials have not yet recognized. Investors are waiting for the release of July data on the labor market on Friday, fearing that the pressure on it could seriously increase: the June data on the number of open vacancies from JOLTS published yesterday was already worse than investors' expectations, and the figure fell from 11.303M to 10.698M. Also, Experts are concerned about the new aggravation of relations between the US and China: yesterday's visit of US House Speaker Nancy Pelosi to Taiwan is likely to trigger a series of new mutual economic sanctions that could put additional pressure on the US economy.

The trading instrument is trying to resume growth from the middle line of Bollinger bands. A break above 0.6958 (Murrey [1/8]) will allow the asset to rise to 0.7080 (Murrey [2/8], Fibonacci retracement 38.2%), 0.7202 (Murrey [3/8]). The key "bearish" level is 0.6835 (Murrey [0/8], Fibonacci 50.0%) below the middle line of Bollinger bands. If it is broken down, the decline can continue to 0.6713 (Murrey [–1/8]) and 0.6591 (Murrey [–2/8]).

Technical indicators do not give a single signal: Bollinger bands reverse upwards, Stochastic points downwards, and the MACD histogram is stable in the positive zone.

Resistance levels: 0.6958, 0.7080, 0.7202. | Support levels: 0.6835, 0.6713, 0.6591.

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