The AUD/USD pair is on the rise during the early European session, moving closer to a two-and-half-week high reached on Friday. Currently trading around the 0.6600 mark, bulls are eyeing a breakthrough of the 200-day Simple Moving Average (SMA).
The Australian Dollar (AUD) is being supported by the Reserve Bank of Australia’s (RBA) hawkish stance, with Governor Michele Bullock emphasizing the need to combat inflation risks. This, coupled with a positive tone in equity markets, is boosting the risk-sensitive Aussie.
On the other hand, the US Dollar (USD) is struggling amid expectations of larger interest rate cuts by the Federal Reserve (Fed). This provides additional support to the AUD/USD pair, although concerns about China’s economic troubles may limit bullish momentum. Traders are also cautious ahead of this week’s US inflation data releases.
This week’s economic calendar includes the US Producer Price Index (PPI) on Tuesday, followed by the Consumer Price Index (CPI) on Wednesday. These releases, along with Retail Sales figures, will impact market expectations regarding the Fed’s future policy decisions. Overall, the fundamental backdrop favors bullish sentiment and suggests potential for further gains in the AUD/USD pair.
Analysis:
The AUD/USD pair is experiencing a positive uptrend, driven by the RBA’s hawkish stance and a buoyant risk tone in the markets. The outlook for the pair remains bullish, supported by the potential for interest rate hikes by the RBA. However, concerns about China’s economic slowdown and upcoming US inflation data releases could dampen bullish sentiment. Traders should keep a close eye on key economic indicators to gauge the future direction of the AUD/USD pair and consider potential risks to their investment portfolios.