The AUD/USD exchange rate experienced a notable increase following the Reserve Bank of Australia’s announcement regarding its interest rate decision on Tuesday. The asset surged to a peak of 0.700, reflecting a significant increase from this week’s low of 0.6900. The AUD/USD exchange rate has experienced a notable uptrend in recent weeks, driven by increasing expectations of a divergence between the Reserve Bank of Australia and the Federal Reserve.
On Tuesday, the RBA issued a notably hawkish interest rate decision. The interest rates were increased by 0.25% to 3.85% as part of efforts to combat the high inflation rate. The rate hike positioned it as an anomaly, given that the majority of central banks are reducing interest rates. For instance, the Federal Reserve has implemented three interest rate reductions in recent months, and experts anticipate that the bank will execute additional cuts this year. The RBA’s decision to raise rates followed the latest data indicating an improvement in the labor market, alongside inflation rising to over 3%, significantly exceeding the bank’s target of 2.0%.
Experts at leading financial institutions forecast that the bank might increase interest rates once more in May this year, given that the economy is operating near its full potential. A report released on Monday indicated that job advertisements surged to the highest level since February 2022. The AUD/USD exchange rate is poised to respond to the forthcoming service PMI figures, which will shed light on the state of the American economy. Analysts anticipate that the forthcoming data will indicate a decline in the ISM services PMI, dropping to 53.5 from the prior figure of 54.4. The pair is expected to respond to the forthcoming ADP jobs report. Analysts anticipate that the forthcoming data will reveal the prior sector generated more than 48,000 jobs in January, following an increase of over 45,000 the month before.
The daily timeframe chart indicates that the AUD/USD pair has experienced a robust uptrend over the past few months. The value increased from a low of 0.6416 in December to a high of 0.7095. The pair has recently surpassed the significant resistance level at 0.6707, marking its peak on September 17. The asset has consistently traded above the 50-day and 100-day Exponential Moving Averages. The pair exhibited a doji candlestick pattern on Monday. The pair is expected to maintain its upward trajectory as bullish sentiment aims for the year-to-date peak of 0.7095. A breach of that level will indicate further upside, possibly reaching 0.7000.