Reserve Bank of Australia and Federal Open Market Committee meeting minutes in the spotlight
AUD/USD overview on Monday
The AUD/USD pair rose 0.65% on Monday. After rising 0.71% on Friday, the Australian dollar ended the day at $0.65562. The Australian dollar rose from the opening price of $0.64992 to the highest level during the session at $0.65651.
Reserve Bank of Australia meeting minutes and directors’ speeches under the microscope
On Tuesday, the minutes of the Reserve Bank of Australia meeting will attract investors’ attention. Recent Australian wage and employment growth figures have signaled the need for a more aggressive interest rate path from the Reserve Bank of Australia. Challenging labor market conditions support growth in wages and disposable income. The upward trend in disposable income fuels consumer spending and demand-driven inflationary pressures.
Meeting minutes can reveal board members’ desire to raise interest rates.
A tighter interest rate path by the RBA would increase borrowing costs, reducing disposable income and consumer spending. It is worth noting that the downward trend in consumer spending would ease inflationary pressures resulting from demand.
Reserve Bank of Australia Governor Michael Bullock and Board Member Schwartz are scheduled to speak. Tighter comments should support buyers’ demand for the Australian dollar.
Speakers and Fed lecturers in the spotlight
On Tuesday, US existing home sales numbers and the Chicago Fed National Activity Index (CFNAI) will attract investors’ attention. However, the FOMC meeting minutes will be the focal point.
Barring the dire home sales numbers, the CFNAI is likely to have more impact on buyers’ demand for the US dollar. The index gives investors a measure of economic activity and inflationary pressures. However, investors are likely to delay decisive moves until the minutes of the FOMC meeting.
Recent economic indicators have fueled bets on a Federal Reserve rate cut in May. Inflation and retail sales reports were released after the FOMC minutes, making the minutes dated. However, the minutes can reveal which direction the Fed is primarily focused on. In addition to inflation, labor market conditions and wage growth are other considerations.
Short term forecast
The short-term trends of the AUD/USD pair depend on the minutes and speeches of the RBA and FOMC. Recent economic indicators have led to monetary policy shifting towards the Australian dollar. Meeting minutes and central bank speeches could reinforce policy bets.
AUD/USD price movement
The AUD/USD pair settled above the 50-day EMA while remaining below the 200-day EMA, reaffirming bullish near-term but bearish long-term price signals.
A breakout of the AUD/USD pair above the 200-day moving average would support a move to the trend line and resistance level at $0.66162.
The RBA and Fed meeting minutes and the central bank’s speeches will serve as focal points.
However, a drop below $0.65 would trigger the support level at $0.64900.
A daily 14-period RSI reading of 63.43 indicates a move to the trend line before entering overbought territory (usually above 70 on the RSI scale).
The AUD/USD pair remains above its 50-day and 200-day EMA, reaffirming near-term bullish price signals.
A breakout of AUD/USD above the trend line would support a move to the $0.66162 resistance level.
However, a drop below the $0.65 level would give bears an opportunity to make a rally at the $0.64900 support level and the 50-day EMA.
The 4-hour 14-period RSI at 69.13 indicates AUD/USD moving to the trend line before entering the overbought zone.