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As Reserve Bank of Australia deputy governor Michelle Bullock said last month, "further rate hikes will be needed in the coming months." They need to be raised “to some neutral level. It's a little higher than the one we're on right now."
The minutes of the July meeting of the RBA on monetary policy, published earlier, also indicated that "further steps should be taken in the coming months to normalize monetary conditions in Australia." “The level of interest rates is still very low for an economy with high labor market demand and facing a period of high inflation,” and “CB members considered raising interest rates by 25 basis points or 50 basis points,” the minutes said. For inflation to return to the target level, “further increase in the interest rate will be required over time.”
The targets of the current upward correction are the key resistance levels 0.7100 (EMA144 on the daily chart), 0.7150 (EMA200 on the daily chart). Below these levels, AUD/USD is still in the bear market zone. Only a breakdown of the long-term resistance level 0.7280 (EMA200 on the weekly chart) will bring the pair into the zone of a long-term bull market.
Volatility in the market, and especially in the pair AUD / USD, will increase during tomorrow's Asian trading session: at 04:30 (GMT) the decision of the RBA on the interest rate will be published. Its next increase is expected (to the level of 1.85%). If in the accompanying statement the RBA signals its intention to pause in the future, then the Australian dollar will be under pressure.
An earlier signal to resume short positions will come after the price returns inside the descending channel on the daily chart, the upper limit of which passes through 0.7000. A confirmation signal will be a consistent breakdown of support levels 0.6960 (EMA50 on the daily chart), 0.6942, 0.6922.
If this scenario is activated, then after the breakdown of the support level 0.6900, the targets for the decline will be the local support levels 0.6850, 0.6800, 0.6700, 0.6685 (the low of July and this year).
It is likely that tomorrow market participants will more accurately determine the direction of trading in AUD / USD, when at 04:30 (GMT) the decision of the RBA on the interest rate will be published.
Of the important macro data awaiting publication today, it is worth paying attention to the business activity index (PMI) in the manufacturing sector from the Institute of Supply Management (ISM), which is an important indicator of the state of this sector and the American economy as a whole. Its publication is scheduled for 14:00 (GMT).
Support levels: 0.7000 0.6960 0.6942 0.6922 0.6900 0.6850 0.6800 0.6700 0.6685 0.6660 0.6500 0.6455 0.6270 0.5975 0.56510
Resistance levels: 0.7037, 0.7100, 0.7150, 0.7200, 0.7280
Trading Recommendations
Sell Stop 0.6985. Stop Loss 0.7055. Take-Profit 0.6960 0.6942 0.6922 0.6900 0.6850 0.6800 0.6700 0.6685 0.6660 0.6500 0.6455 0.6270 0.5975 0.5665 0.5510
Buy Stop 0.7055. Stop Loss 0.6985. Take Profit 0.7100, 0.7150, 0.7200, 0.7280
