Facts:
- The AUDUSD exchange rate is at the lower boundary of a two-year consolidation channel.
- The dollar, after several strong weeks, has taken a temporary (at least) pause.
- The RBA remains hawkish, and analysts forecast the first rate cut not earlier than May (previously February).
Recommendation:
Long position at the market price
- Take Profit (TP): 0.6660; 0.6780
- Stop Loss (SL): 0.6370
Opinion:
The AUDUSD exchange rate remains at low levels near the lower boundary of a consolidation zone lasting over two years. These low levels were driven by the strong dollar in recent weeks. However, the USD is now at relatively high levels, and last week saw a strong reversal and declines, which may indicate dollar weakness at least in the short term.
On the other hand, recent interviews with RBA Governor Bullock confirm that the Australian central bank remains hawkish. The RBA maintains a restrictive monetary policy until inflation sustainably returns to the target range of 2-3%, which, according to forecasts, may not happen until 2026. The October “core” monthly CPI reading at 3.5% year-on-year, significantly above the target, highlights persistent inflationary pressures, reducing the likelihood of rate cuts in the near term. Currently, the market expects interest rates to remain unchanged at the upcoming RBA meeting on December 9-10. Moreover, a February rate cut also appears uncertain, with the possibility of postponement to the May meeting.
Given these factors, we believe the AUDUSD pair has the potential to rebound from the current support zone. Therefore, we recommend taking a long position at the market price, with a stop loss set to minimize the risk of potential loss.
Source: xStation 5
