• RBA governor Michele Bullock said there is still a chance the RBA will hike interest rates.

• Markets now place a 38% likelihood of an RBA hike in February.

• Expectations for a March Fed cut dropped to 16.5%.

Friday’s AUD/USD price analysis revealed bullish momentum, marked by a resilient recovery following a significant dip in the previous session.

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The currency bounced back, fueled by the hawkish remarks of RBA Governor Michele Bullock. Bullock said there is still a chance the RBA will hike interest rates as inflation remains a problem. Moreover, the central bank believes the journey to the 2-3% target is still long.

The markets reacted to her hawkish remarks by pushing up bets for a rate hike at the next policy meeting. A week ago, there was nearly no chance that the RBA could hike rates at the February 28th policy meeting. However, markets now place a 38% likelihood of such an outcome. Still, most market participants doubt the possibility of a hike.

Meanwhile, economists have adjusted the possible timing of the first rate cut to September. At the same time, the chances of a rate cut in May have dropped from 50% early last week to 20%.

A wave of hawkish remarks from major global central banks has dampened expectations for rate cuts. Consequently, some experts like UBS expect the first RBA rate cut as late as November.

In the previous session, the pair declined as the dollar strengthened amid declining rate-cut bets. Rate cut expectations declined after unemployment claims data fell more than expected. At the same time, more Fed policymakers, including Thomas Barkin and Susan Collins, made statements suggesting the Fed was in no hurry to cut interest rates. As a result, expectations for a March cut dropped to 16.5%.

AUD/USD key events today

After Michele Bullock’s speech, the calendar for AUD/USD is empty for today. Therefore, traders will keep digesting the new outlook for RBA and Fed rate cuts.

AUD/USD technical price analysis: Price rebounds to challenge 30-SMA resistance

On the charts, AUD/USD has recovered to the 30-SMA resistance. However, the bias is bearish because the price is on a downtrend, keeping below the SMA. At the same time, the RSI has mostly stayed in bearish territory below 50.

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Therefore, a pullback to the SMA will likely result in a bounce lower. Initially, when the price broke below the 0.6525 support, it pulled back but could not surpass the 30-SMA. Therefore, there is a big likelihood the price will respect the SMA again and fall to the 0.6450 support, a new low.

https://www.forexcrunch.com/blog/2024/02/09/aud-usd-price-analysis-aussie-bounces-on-hawkish-rba/