AUD/USD jumps more than 60 pips after RBA decision to raise rates by 25 basis points

The AUD/USD has risen nearly 65 pips after news that the Reserve Bank of Australia raised its rates by 25 basis points to 0.35%, above the 0.25% expected. The pair has jumped above 0.7100, reaching 2-day highs at 0.7147although it has subsequently moderated its momentum.

The Board felt that now was the right time to start withdrawing some of the extraordinary monetary support that was provided to help the Australian economy during the pandemic. Furthermore, it points to further rate hikes at upcoming meetings.

According to the statement, the economy has proven resilient and inflation has recovered faster and to a higher level than expected. There is also evidence that wage growth is picking up. Given this, and the very low level of interest rates, it is appropriate to start the process of normalizing monetary conditions.

Traders in the pair will now be watching to digest the news, as no relevant US data beyond March factory orders is expected today. Tomorrow will be a key day with the ADP for employment and the ISM for April services, and above all with the event of the month, the Fed’s monetary policy decision.

AUD/USD Levels

With the pair trading at time of writing above 0.7101, gaining 0.71% daily, next resistance awaits at 0.7180, roof of April 29. To overcome the psychological zone 0.7200the main barrier appears in 0.7230maximum of April 26.

To the downside, initial support is at 0.7029, minimum of yesterday and of the last three months. Below, the Australian dollar can fall to 0.6984floor of January 31, already 0.6966minimum of January 28 and so far in 2022.