- The AUD/USD forecast indicates resilience in the Australian dollar despite a drop in risk appetite.
- The dollar rebounded on Tuesday as geopolitical tensions sent traders scrambling for safety.
- Market participants are only confident of an RBA cut in November.
The AUD/USD forecast indicates resilience in the Australian dollar despite a drop in risk appetite due to geopolitical tensions. The Aussie had been on a rally since the US released poor employment figures that boosted Fed rate cut expectations. While the Fed might deliver three cuts in the coming months, traders are only confident of an RBA rate cut in November.
The dollar rebounded on Tuesday as geopolitical tensions sent traders scrambling for safety. Meanwhile, the risk-sensitive Aussie dropped. Reports revealed that Israel carried out an airstrike on Qatar in an attempt to kill Hamas leaders. At the same time, the war in Ukraine escalated beyond its borders, with some Russian drones being shot down in Poland.
The reports reduced the appetite for risk, giving the dollar some relief. The greenback has dropped since Friday after poor jobs data increased expectations for Fed rate cuts this year. Traders are pricing at least three rate cuts before the year ends. This is more dovish than the RBA’s outlook.
Australia’s economy has remained fairly strong, and inflation in the country hot. As a result, RBA rate cut bets have fallen. Market participants are only confident of a cut in November.
AUD/USD key events today
- US core PPI m/m
- US PPI m/m
AUD/USD technical forecast: Steep rally pauses at the channel resistance
On the technical side, the AUD/USD price trades well above the 30-SMA, and the RSI is above 50, suggesting a bullish bias. At the same time, the price is trading in a bullish channel, respecting clear support and resistance lines.
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Bulls recently made a steep swing from the channel support to the resistance near the 0.6620 level. Here, bears have returned to trigger a pullback. However, bulls are still struggling to make new highs. A break above the channel resistance would signal a spike in bullish momentum that could start a steeper trend.
On the other hand, the price could just edge higher along the channel resistance until bears are ready to take over. When bears take over, the price will drop to retest the channel support before continuing higher. The bullish bias will remain strong as long as the price continues making higher highs and lows.
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