• RBA governor Michelle Bullock said the central bank would not hesitate to hike interest rates.

• The likelihood of an RBA rate cut in November fell to 46%.

• The US dollar eased as markets focused on the Fed’s rate cut outlook.

The AUD/USD forecast shows strong bullish sentiment as the Aussie climbs after hawkish Reserve Bank of Australia comments. Meanwhile, the dollar eased as markets focused on the likelihood of a September Fed rate cut.

-Are you looking for automated trading? Check our detailed guide-

On Thursday, RBA governor Michelle Bullock said the central bank would not hesitate to hike interest rates to control inflation. Her remarks come after the recent inflation report showing easing price pressures. Markets had raised the likelihood of an RBA cut in November. However, since then, policymakers have maintained a cautious tone, saying underlying inflation remains high.

After these remarks, the likelihood of a rate cut in November fell to 46%. Meanwhile, Australia’s Westpac pushed back its forecast for the first rate cut from November to February next year. Notably, the Reserve Bank of Australia did not raise interest rates as much as most major central banks. As a result, policymakers feel they should hold on to high rates for longer despite the recent wave of rate cuts.

Meanwhile, the US dollar eased as markets focused on the Fed’s rate cut outlook. After last week’s employment report, investors fully priced in the first rate cut in September. Moreover, they shifted from expecting 25 bps to 50 bps. However, the numbers have gone down as fears of a recession eased. Still, the markets have more confidence now that the Fed will soon start cutting rates.

The next major report on US inflation will be released next week. Another softer reading will reinforce bets on a September rate cut.

AUD/USD key events today

• US unemployment claims

AUD/USD technical forecast: Bears lose control after bullish RSI divergence

On the technical side, the AUD/USD price has broken above the 30-SMA, indicating a bullish sentiment shift. This shift follows a bullish RSI divergence that indicated fading bearish momentum. As a result, bulls regained enough strength to take control by pushing the price beyond the SMA.

-If you are interested in forex day trading then have a read of our guide to getting started-

However, the price must make higher highs and lows to confirm a bullish trend. At the moment, bulls are facing the 0.6550 resistance. A break above this level will allow the price to climb to the 0.6700 key psychological level.

https://www.forexcrunch.com/blog/2024/08/08/aud-usd-forecast-aussie-rises-amid-hawkish-rba-tone/