AUD/USD Forex Signal: Bearish Bias Persists – 08 February 2023
The AUD/USD pair also reacted to the first interest rate decision by the Reserve Bank of Australia (RBA).
Sell the AUD/USD pair and set a take-profit at 0.6800.Add a stop-loss at 0.7050.Timeline: 1-2 days.
Set a buy-stop at 0.7015 and a take-profit at 0.7125.Add a stop-loss at 0.6900.
The AUD/USD price wavered after the first interest rate decision of the year by the Reserve Bank of Australia (RBA) and the latest statement by Jerome Powell. It initially rose to 0.6985 during Jerome Powell’s speech and then retreated to 0.6920. This price is about 3.3% below the highest level this month.
Jerome Powell on disinflation
Jerome Powell, the Federal Reserve chair, delivered his first statement after the central bank made its first decision of the year and after the strong jobs numbers. In his statement, he said that disinflation had already began especially in the goods sector. He then warned that price increases in the services sector was still at an elevated level.
At the same time, he believes that the ongoing hiring surge means that prices will likely remain at an elevated level. As such, the Fed will likely continue hiking interest rates and hold them high for quite some time. His statement echoed those of other Fed officials like Raphael Bostic and Neel Kashkari who talked on Tuesday.
The AUD/USD pair also reacted to the first interest rate decision by the Reserve Bank of Australia (RBA). In it, the bank decided to hike interest rates by 0.25% to 3.35%. In his statement, Governor Philip Lowe said that the bank will continue hiking rates since inflation remains so high.
The most recent data showed that the country’s inflation rose to a multi-decade high of 7.8% in the fourth quarter of the year. As a result, the RBA expects that inflation will end the year at 4.5%.
The AUD/USD pair formed a double-top pattern at 0.7142 between January 26 and February 2nd. The neckline of this pattern was at 0.6985, the lowest point on January 31st. It managed to move below the neckline recently. Also, it dropped below the lower side of the ascending channel shown in red.
On Tuesday, the pair retreated to a low of 0.6856, which was an important level since it was its highest point on December 13. It has also moved below the 25-day and 50-day moving averages (MA).
Therefore, after moving below the neckline of the double-top pattern and the lower side of the ascending channel, the outlook is still bearish. The pair will likely continue falling as sellers target the key support level at 0.6800.