AUD/USD draws interest from buyers around the 0.7170 mark during the early Asian session on Wednesday. A growing number of economists anticipate that the RBA will increase interest rates in the upcoming week. The prevailing positive bias of the pair remains intact above the significant 100-day EMA, supported by bullish RSI momentum. The initial support level is identified at 0.7120, while the immediate resistance level to monitor is 0.7240. The AUD/USD pair continues its upward movement, reaching approximately 0.7170 in the early European trading session on Wednesday. The Australian Dollar approaches a three-year peak against the Greenback, driven by hawkish expectations surrounding the Reserve Bank of Australia.
Many experts anticipate that the Australian central bank will increase interest rates next week, following an inflation warning issued by a senior official just a day prior. On Tuesday, RBA Deputy Governor Andrew Hauser indicated that the surge in oil prices is likely to elevate inflation beyond the anticipated 4.2%. He cautioned that the ongoing conflict in the Middle East could necessitate an interest rate increase in the near term. Hauser noted that the reaction is contingent upon the magnitude and duration of the price shock, which remains highly uncertain.
Current market expectations indicate a nearly 75% probability that the RBA will increase interest rates by 25 basis points to 4.1% in the upcoming week, driven by rising oil prices and heightened inflation risks stemming from tensions in the Middle East, as reported. In the daily chart, the near-term outlook for AUD/USD remains positive as the price moves above the ascending 100-day exponential moving average and stays near the upper Bollinger Band, indicating ongoing upward momentum. The Bollinger envelope has expanded in recent sessions, indicating a rise in volatility consistent with the latest upward movement. The RSI hovering in the mid-60s stays within a favorable range, yet it has not reached extreme overbought levels, suggesting robust buying momentum with only slight indications of weariness.
Initial support is identified at 0.7120, protecting the psychological level of 0.7100, with the Bollinger middle band positioned just beneath 0.7050. A daily close beneath that zone would reveal further support at 0.7020 and subsequently at 0.6960, where the overarching uptrend from the 100-day EMA would warrant examination. On the upside, immediate resistance is observed at 0.7240, followed by 0.7300, where the upper Bollinger Band extension is expected to limit additional gains.