The Reserve Bank of Australia increased the key interest rate by 50 basis points. The advice offered by the central bank was seen as “dovish” and drove the Aussie to the downside. The AUD/USD pair fell to 0.6910. After reaching a fresh daily high at 0.6909, it started to recover.
Since the beginning of the American session, it recovered more than 50 pips. At the same time, the AUDNZD that bottomed at 1.1007, the lowest in two weeks, rebounded and as of writing, it trades at 1.1055/60. The push to the upside took place as equity prices in Wall Street turned positive and as the US dollar lost momentum against commodity currencies, even amid higher US yields.
The AUDUSD pair chart shows the pair still moving sideways around 0.6970. The 0.6910 zone has become a critical support that if broken should clear the way to more losses, targeting first the 20-day Simple Moving Average at 0.6878.
Analysts at Rabobank, see scope for another bout of broad-based USD strength to push AUD/USD lower on a 1 to 3 month view but then they see a recovery. “We expect AUD/USD to rise to the 0.74 area on a 12 month view.”
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