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AUD/USD Forex Signal: Bearish Trend Has More Room to Run – 07 September 2022

The AUD/USD pair continued dropping on Wednesday after the latest Australian GDP data.


Bearish view

Sell the AUD/USD pair and set a take-profit at 0.6600.Add a stop-loss at 0.6850.Timeline: 1-2 days.

Bullish view

Set a buy-stop at 0.6770 and a take-profit at 0.6900.Add a stop-loss at 0.6650.

The AUD/USD continued its downward trend as the US dollar strength continued. The sell-off also accelerated after the latest interest rate decision by the Reserve Bank of Australia (RBA) decided to hike interest rates. It fell to a low of 0.6730, which was the lowest level since July of this year.

RBA dovish rate hike

The AUD/USD price continued dropping after the latest interest rate decision by the RBA. The bank decided to deliver its fifth interest rate hike of the year. It hiked by 50 basis points to 2.35% as most analysts were expecting.

The bank expects that inflation will keep rising this year and peak at about 7.7%, which is substantially higher than the bank’s target of 2.0%. Analysts believe that the Australian dollar retreated because the rate hike was expected.

At the same time, some analysts believe that the RBA opened doors to slowing the pace of rate hikes as the economy slows. In his statement, Dr. Philip Lowe said the bank will continue hiking rates and warned that there was no pre-set path.

In a note, an analyst at JP Morgan said that he expects that the bank will hike by another 0.50% in October followed by 0.25%in November. He then expects the bank to have an extended pause on hikes.

The AUD/USD pair continued dropping on Wednesday after the latest Australian GDP data. According to the statistics agency, the economy expanded from 0.8% in Q1 to 0.9% in the second quarter. This increase translated to a year-on-year increase of 3.6%. This increase was helped by the strong consumer spending and high exports.

Meanwhile, the US dollar continued rising after the positive US non-manufacturing PMI data from the Institute of Supply Management (ISM). The data showed that the sector continued growing in August.

AUD/USD forecast

The AUD/USD pair continued falling on Wednesday morning. It managed to move below the important support level at 0.6771, which was the lowest point on Wednesday. The pair dropped below the 25-day and 50-day moving averages and the first support of the standard pivot point. Its MACD has moved below the neutral point. It has also formed a head and shoulders pattern.

Therefore, the pair will likely continue falling as sellers target the next key support level at 0.6600. A move above the resistance at 0.6780 will invalidate the bearish view.

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