The AUD/USD has reacted with a rise of almost 65 pips to the surprise announcement of the RBA, which has raised rates by 50 basis points against the 25 expected. The pair has jumped above 0.7200, reaching 2-day highs at 0.7247, but minutes later it has started to lose momentumreturning to the starting area of ​​the movement, around 0.7180/85.
The Reserve Bank of Australia has raised interest rates from 0.35% to 0.85%, when an increase to 0.6% was expected. This is the second climb of the year. Rates are at their highest level since September 2019.
In its statement, the central bank has acknowledged that although inflation is lower than in most other advanced economies, it is higher than expected. He also pointed out that the rise in interest rates that the Council carried out today is one more step in the withdrawal of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic, pointing out that the resistance of the economy and higher inflation make this extraordinary support no longer necessary.
“The Board looks forward to taking further steps in the process of normalizing monetary conditions in Australia in the coming months. The size and timing of future interest rate hikes will be guided by emerging data and the Council’s assessment of the outlook for inflation and the labor market. The Board is committed to doing whatever is necessary to ensure that inflation in Australia returns to target over time,” the RBA release confirms.
Waiting for AUD/USD traders to digest the news, Tuesday’s focus will be on market sentiment and US Trade Balance data for April.
AUD/USD Levels
With the pair trading at time of writing above 0.7176, shedding 0.22% on the day, first support awaits at 0.7158, daily minimum. Below, the target is in 0.7140, floor of June 2. below the area 0.7100the level to watch is 0.7034, May 25 low.
To the upside, initial resistance is in the area 0.7265/70, where the maximums of May 4 and 5 are. higher up wait 0.7283June 3 ceiling, and the psychological zone 0.7300.
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
